黑洞社区

The Financial Reporting Council has fined PwC and one of its former partners nearly 拢5m for breaches in its audit of three sets of accounts filed by Galliford Try and Kier.

The penalties handed out by the financial watchdog relate to Galliford Try鈥檚 2018 and 2019 accounts and Kier鈥檚 2017 accounts.

It said the Galliford Try breaches centred on 鈥渢he audit of the revenue and costs recognised on a large and complex long term construction contract. [These] relate to compliance with applicable accounting standards; insufficient challenge of management鈥檚 assertions and lack of professional scepticism.鈥�

PwC was fined just over 拢3m, reduced from 拢5.5m, while audit engagement partner Jonathan Hook, who retired last summer after nearly four decades at the business, was fined just under 拢83,000 and handed a severe reprimand.

In a separate ruling, the FRC said PwC and Hook, now a non-executive at T Clarke, both admitted breaches in relation to the audit of long-term contracts within Kier鈥檚 construction division.

It said the pair 鈥渇ailed to obtain sufficient appropriate audit evidence; perform adequate testing or carry out substantive procedures on the Company鈥檚 accounting estimates; prepare sufficient audit documentation to support conclusions reached and carry out the audit with sufficient professional scepticism鈥�.

It added that they 鈥渇ailed to identify and correct errors in the Company鈥檚 income and cash flow statements relating to the presentation of gains on corporate disposals completed in the 2017 financial year鈥�.

For these breaches, PwC was fined 拢1.96m, reduced from 拢3.35m, while Hook was handed a fine of just over 拢52,500 and a severe reprimand.

The FRC said both PwC and Hook had cooperated with the investigations and had made early admissions which resulted in the reduced fines. It added that it did not think 鈥渢he breaches were intentional, dishonest or reckless鈥�.

It said PwC had also introduced several initiatives to tighten up procedures in the relevant areas following its probe.