PricewaterhouseCoopers LLP was hit with a £5.6 million ($6.6 million) fine by the UK’s audit watchdog over serious failures for its work on Babcock International Group Plc’s books in 2017 and 2018.
(Bloomberg) — PricewaterhouseCoopers LLP was hit with a £5.6 million ($6.6 million) fine by the UK’s audit watchdog over serious failures for its work on Babcock International Group Plc’s books in 2017 and 2018.
“The quality of these audits fell far short of the standards expected of statutory auditors. Of particular concern is the lack of skepticism applied and the failures to follow some basic audit requirements,” Claudia Mortimore, the Financial Reporting Council’s deputy executive counsel, said. The fine was discounted by 25%.
The world’s biggest auditors have come under intense scrutiny form regulators over some of the most high profile finance scandals in recent years from Greensill to Carillion Plc. PWC was fined £1.75 million last year over its 2017 audit of BT Group Plc.
“We’re sorry that the work in question was not of the standard required and that we demand of ourselves,” a PwC spokesperson said. “In the years since, we have made significant and continuous investment in strengthening audit quality.”
The fines concerns include seven long-time contracts at Babcock and subsidiary Devonport Royal Dockyard Ltd., which made up 25% of Babcock’s 2018 financial year group revenue, according to a statement Wednesday.
As well as a company fine, Nicholas Campbell Lambert, audit engagement partner for Babcock, and Heather Ancient, audit engagement partner for DRDL, will pay fines of £150,000 and £48,750 respectively, the FRC said. Both sanctions were discounted for admissions.
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