PwC fined US$19 million over LCF audit failures
BRITAIN’S financial regulator fined audit firm PwC US$19.3 million on Friday (Aug 16) for failing to alert the watchdog that London Capital & Finance (LCF) might be involved in fraudulent activity ahead of its costly collapse for taxpayers.
The fine throws a spotlight on how far auditors should be responsible for flagging potential fraud in a company’s accounts.
PwC, one of the world’s “Big Four” auditors, encountered “significant issues” through its audit of LCF, the investment firm that collapsed in early 2016, the Financial Conduct Authority said on Friday.
It left investors facing losses on unregulated ‘mini bonds’ they had bought from LCF, with Britain’s taxpayers having to pay about £120 million (S$204.2 million) to compensate them.
The FCA said that a senior individual at LCF “acted aggressively towards auditors”, and the firm provided PwC with “inaccurate and misleading information”.
“LCF’s actions, and PwC’s own work on the audit, led PwC to suspect that LCF might be involved in fraudulent activity. PwC was duty bound to report those suspicions to the FCA as soon as possible, but they failed to do so,” the watchdog said in a statement.
PwC said the FCA has acknowledged that the auditor was not involved in the misconduct at LCF.
“We have reached a settlement with the FCA to resolve an unintentional reporting breach,” PwC said in a statement. REUTERS
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