PwC and UK partner hit with £3M fine over Babcock audit
PwC and one of its partners have been fined more than 3 million pounds ($4.1 million) by a British regulator over its investigation of Babcock International Group Plc.
Administrative Matters
The Financial Reporting Council said PwC and its investigative partner, John Waters, “admitted to several serious violations,” according to a statement Thursday. The company and Waters did not receive adequate audit evidence in some cases and failed to challenge Babcock’s management to determine whether its accounting system was adequate.
The sanctions are based on an audit of Babcock’s financial statements for the 2019 and 2020 financial years. UK-based Babcock, which is listed, provides engineering services, with a number of contracts with the UK government, according to the FRC.
“We regret that some parts of these audits did not meet the standards expected,” PwC said in a statement. “Quality improvement is an ongoing focus for the company and the effectiveness of our commitment to continuous improvement is underlined by the results of the recent survey.”
Babcock shares fell in 2021 after the company reported more than £2bn of losses and made some accounting changes following a major business review. The company said it had to return the profits it had previously reported in error.
The fine has been reduced from £5m to reduce co-operation and hospitality, the UK regulator has said. PwC was fined £3.2 million, while Waters’ sanction was around £59,000. Waters has retired from PwC and is no longer a registered practitioner.
