PwC Fined Record $6.5M For Auditing Misconduct

A U.K. regulator has fined PwC $6.5 million — a record for the watchdog, reports said — for misconduct during its audit of Connaught.

Reports Thursday (May 11) said the Financial Reporting Council slapped PwC with the fine and issued a separate fine to retired PwC audit partner Stephen Harrison for his role in the 2009 audit. Connaught, a social housing maintenance firm, went into administration in 2010, reports added.

The fines were issued following an investigation by the FRC and a 12-day hearing, after which an independent tribunal concluded PwC engaged in misconduct related to “mobilization costs, long term contracts and intangible assets,” reports said.

The FRC also ordered PwC to pay its Executive Counsel’s costs.

According to reports, PwC has apologized for the matter.

“Since 2010, when the case began, we’ve worked hard to improve our procedures and processes,” the auditing firm said in a statement. “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.”

The independent tribunal had called for an investigation into the FRC itself earlier this year after it was revealed the watchdog would be pursuing a $7.73 million fine. The FRC did not comment on that internal investigation, however. The largest fine it had previously issued was $5.15 million on accounting company Deloitte for its misconduct in auditing Aero Inventory.