Audit work by PwC has come under scrutiny for the third time in less than six months after the industry watchdog issued a formal complaint against the firm for its work on the accounts of another business.
The Financial Reporting Council yesterday issued a formal complaint against PwC and Nicholas Boden, a partner at the firm, over the audit of financial statements published by RSM Tenon, at the time the UK’s only listed accountancy firm, before it came close to going bust four years ago.
A public complaint by the FRC alleged that PwC and Mr Boden, a senior statutory auditor and audit engagement partner, failed to meet its standards of professional competence and also breached the accountancy industry’s ethics code in their preparation of RSM’s 2011 financial statements.
“The complaint alleges that Mr Boden and PwC failed to act in accordance with the fundamental principle of professional competence and due care contained in the ICAEW code of ethics in relation to the audit of the financial statements of RSM Tenon, and that their conduct fell significantly short of the standards reasonably to be expected of a member or member firm of the ICAEW,” the FRC said in a statement.
The action against the firm comes four months after PwC and another of its senior partners admitted falling short of the required standards after an investigation into the failure of Cattles, the specialist lender, that also said their conduct “fell significantly short” of what was expected of them.
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In October, the FRC said its disciplinary panel was considering issuing a formal complaint against PwC for its work on the accounts of Connaught, the former FTSE 250 social housing company. As with RSM and Cattles, PwC has been accused of failing to ensure accounts met industry standards.
RSM came close to collapse in 2012 after admitting that its financial statements for the previous year contained “significant errors”.
As well as PwC and Mr Boden, the FRC is attempting to censure Russell McBurnie, the former finance director of RSM Tenon, alleging that he breached “principles of integrity and professional competence”.
Andrew Raynor, former chief executive of RSM, has settled an FRC investigation into his role in the scandal. The FRC said that Mr Raynor had agreed that he did not properly vet the accounting treatment of bonus accruals and a lease when he signed off the accountant’s accounts.
The FRC has fined Mr Raynor £40,000, reduced to £26,500 because of his co-operation, and charged him £50,000 in costs. A spokeswoman for PwC said: “We are disappointed that the FRC has decided to pursue a complaint and we will defend our work.”