BT face FRC investigation over PwC audits

0
210
A man and a woman work together on a laptop while sitting outside

An investigation into PwC’s audits of the BT Group between 2015 and 2017 has been launched by the Financial Reporting Council (FRC).

Accounting irregularities were revealed by BT, following an internal investigation into BT Italia which found that profits had been overstated for a number of years.

It is believed that the accounting errors will end up costing the telecoms giant £530m, as the revelation of improper practices caused this figure to rise from £145m. These improper practices included incorrectly recording expenditure and improper sales.

The accounting watchdog confirmed an investigation was underway following “announcements by BT in relation to accounting issues in its Italian operations.”

BT commented: “We note the FRC’s announcement that it has commenced an investigation into the audits by PWC. It would be inappropriate for us to comment further at this stage.”

When the scandal was first announced early this year, £7bn was removed from the group’s value as shares dropped 19 per cent. A number of staff members were suspended within BT Italia’s senior management, including the replacement of chief executive Gianluca Climini.

In March, the company received a fine of £42m for breaches of regulation in the Openreach branch of the company, and compensation payments are expected to total £300m.

In response to the FRC’s investigation, PwC commented: “We will continue to co-operate fully with the FRC in its enquiries. The regulator has a duty to investigate where they believe there is a public interest, in order to give confidence to the financial markets.

“Audit quality is of paramount importance to the firm. The FRC’s annual reviews of our audit work, policies and procedures show a continued trend of improvement in our work and we use the FRC’s insights, together with our own reviews, to continuously improve how we deliver high quality audits.”

The FRC has recently closed an investigation into PwC’s auditing of Tesco.

NO COMMENTS