Lib Dems Hit Out At PwC Over Non-Audit Work At Northern Rock

Tue, 02 Oct 2007

Accountancy giant PricewaterhouseCoopers is facing accusations from Liberal Democrat members regarding its earnings in wake of the Northern Rock crisis.

PwC have been accused of earning larger fees for helping the crisis-hit lender to sell on its loans and to borrow funds in the wholesale markets, than for auditing the business .

Northern Rock’s annual report stated that PwC was paid £500,000 in 2006 for its audit work compared to £700,000 in ‘non-audit fees’, specifically "in respect of securitisation transactions and the raising of wholesale funding" .

The bank is going through a peroid of turmoil after it was caught out by its dependence on short-term borrowing, which was deeply affected by the credit crisis - sparked by the upheaval in the US sub-prime housing market.

It has recently had to receive emergency funding from the Bank Of England in order to help stabilise the crisis, which as seen thousands of investors flocking to high street branches to withdraw their money .

Speaking to The Oberver, Vince Cable, LibDem Treasury spokesman, said, "This appears to be a serious conflict of interest ."

"I would worry about the fact that the auditor appears to be making enormous fees from what turned out to be the most disastrous aspects of the Northern Rock situation," he added.
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