PricewaterhouseCoopers hit twice as its Tesco and Barclays work is investigated by watchdog
Accountants PricewaterhouseCoopers have been hit with two separate investigations in one day.
It is believed to be the first time watchdog the Financial Reporting Council (FRC) has announced two probes into one firm in 24 hours.
The investigations relate to two of PwC’s long-standing audit clients, Tesco and Barclays, both embroiled in scandal.
Bad day at the office: Accountants PricewaterhouseCoopers have been hit with two separate investigations in one day, it has been revealed
If the investigations produce evidence that points to misconduct, PwC and individual chartered accountants working at Tesco may be taken to a tribunal.
Sanctions include unlimited fines and costs, severe reprimands for the firm and for individual accountants, and bans lasting several years.
The FRC said it is investigating the ‘preparation, approval and audit’ of Tesco’s accounts for the financial years ending in February 2012, 2013 and 2014.
Since PwC is only responsible for one of those three elements, the audit, that wording implies the watchdog will look at individuals in the supermarket’s finance department, management and possibly its internal audit function.
Tesco has suffered multiple woes including the discovery it had overstated a profits estimate by £263million.
The FRC said its investigation will look at conduct in relation to the ‘matters reported in the company’s interim results for the 26 weeks ended 23 August 2014’.
This part of the probe is likely to focus on Tesco, as the interim figures are not audited.
The FRC inquiry comes after the Serious Fraud Office launched a criminal investigation into claims Tesco cooked its books.
In the last set of accounts, for the year ended Feb 2014, PwC raised ‘commercial income’ – including suppliers’ contributions to advertising and promotions – as an area of focus because of the risk of manipulation.
A forensic investigation found £118million of the £263million related to the first six months of the current financial year and the remainder to earlier periods.
The second, separate probe covers PwC’s conduct over a case where Barclays was fined £38million by the Financial Conduct Authority in September for failing properly to protect clients’ assets worth £16.5billion.
From bad to worse: Tesco has suffered multiple woes including the discovery it had overstated a profits estimate by £263million
The probe relates to PwC’s role reporting to the City regulators on the bank’s compliance with the rules between December 2007 to December 2011.
‘We take our responsibilities very seriously and remain committed to delivering work to the highest professional standards. We will co-operate fully with the FRC in its enquiries,’ said PwC.
PwC audits 39 companies from the FTSE 100 and was this month accused by MPs of ‘selling tax avoidance on an industrial scale’.
A Tesco spokesman said last night: ‘We note the FRC is launching an investigation into individuals and a member firm in relation to the preparation, approval and audit of our accounts for the last three years.
‘We will provide support to the FRC’s investigation.’
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