The Financial Reporting Council announced in January that it was investigating PwC’s audits of defence group Babcock over a four-year period. In the past two years, it has also opened probes into the firm’s audits of collapsed mini bond company London Capital and Finance and Wyelands Bank, owned by steel tycoon Sanjeev Gupta.
The FRC ordered changes to Galliford Try’s accounts two years ago after it overstated its assets by
£94.3mn in its accounts to June 2018. If the regulator finds that PwC failed to meet the required audit standards, it has powers to reprimand the firm, impose a fine and order extra staff training.
The FRC began looking at the audits more closely after concerns were raised during its routine quality inspections, a source said. The exact stage of the regulator’s probes into PwC is not known but the source said the firm was likely to seek a settlement with the watchdog rather than defend any potential adverse findings at a public tribunal.
PwC, which paid its UK partners a record average of £868,000 last year, signs off the accounts of 104 companies on the FTSE 350 index, according to data provider Adviser Rankings.
