PwC Gets Hit With $6.5 Million Fine in UK

PwC’s firm in the United Kingdom was fined a record £5 million ($6.5 million) by the U.K.’s Financial Reporting Council for the way it checked the books of collapsed social housing maintenance company Connaugh, Reuters reported.

The Financial Reporting Council (FRC) also fined Stephen Harrison, a retired PwC audit partner, 150,000 pounds ($193,000) for misconduct in relation to the 2009 audit of listed Connaught, which went into administration in the following year.

The watchdog said in a statement that following an FRC investigation and a 12-day hearing, an independent tribunal found audit misconduct in relation to mobilization costs, long-term contracts and intangible assets.

“PwC were also ordered to pay the (FRC) Executive Counsel’s costs and to make an interim payment on account of 1.5 million pounds,” the FRC said.

PwC said in a statement, “Since 2010 when the case began, we’ve worked hard to improve our procedures and processes. Audit quality is of paramount importance to PwC and the FRC’s annual audit quality assessments have shown a trend of improvement in our work over several years.”

Connaught, which maintained affordable housing for British residents, needed to appoint administrators in September 2010 after it failed to secure financing from lenders. In June, U.K. housing authorities suddenly announced they were delaying several housing upgrade projects in response to the government’s planned budget cuts.

The watchdog is seeking to raise its profile and crack down harder on misconduct after a series of accounting scandals prompted some lawmakers to question its effectiveness, Reuters reported.

Earlier this year it asked the government for more powers.

The FRC’s largest fine had been a 4-million-pound penalty imposed on another Big 4 accounting firm, Deloitte, last year in relation to an audit of Aero Inventory.