PwC fined £5m over audits of Galliford Try and Kier
Big Four accountancy firm PricewaterhouseCoopers (PwC) has been fined £5 million in relation to its audits of Galliford Try and Kier Group.
The company was fined a total of £8,850,000, adjusted to £4,998,500, by the Financial Reporting Council (FRC) - £3,038,750 and £1,959,750 for its audits of Galliford Try and Kier Group respectively.
Additionally PwC’s global engineering & construction leader, Jonathan Hook, who was responsible for the accounts, has been fined £240,000 (adjusted to £135,525) for his involvement in both audits - £82,875 and £52,650 respectively.
The reductions of the £8,850,000 and £240,000 figures were made in consideration of PwC and Mr Hook’s “exceptional level of cooperation” and admissions of the breaches.
This is the latest result from a series of probes launched into the firm by the FRC in recent years. Other investigations have been launched regarding its audits of Eddie Stobart, BT, London Capital & Finance, Wyelands Bank and Babcock.
Claudia Mortimore, deputy executive counsel at the FRC, said: “Rigorous auditing of long-term contract accounting is particularly important in the audit of construction companies, where many contracts are spread over a number of years.
“Auditors must not only ensure that they obtain sufficient appropriate audit evidence to support the accounting of the contracts, but also apply sufficient professional scepticism. This is vital so that investors can have confidence in the financial statements.
“The Respondents have accepted that there were deficiencies in the work performed on long-term contracts in this Audit. In the intervening years, PwC has introduced a number of initiatives aimed at improving the quality of audit work in this area.
“In addition to the financial sanctions, the non-financial sanctions require PwC to review long-term contract audit work in subsequent audit engagements and to report to the FRC as to the efficacy of the initiatives it has introduced.”
Galliford Try had to restate its accounts in 2020 after it was rebuked by the FRC, which decided that it should not have recognised an £80m legal claim related to the Aberdeen bypass project as an asset.