PricewaterhouseCoopers has been served with the largest fine in the history of audit regulation over failures which directly preceded the insolvency of pension and wealth group RSM Tenon in 2013.
The big four accountancy firm face a £5.1 million penalty after admitting misconduct in preparing RSM Tenon’s 2011 accounts. The company’s senior audit partner Nicholas Boden will face a separate penalty of £114,750. Both will also face ‘a severe’ professional reprimand.
Those were reduced from £6 million and £150,000 respectively, after adjusting for early settlement and mitigating factors.
A statement from the Financial Reporting Council said: ‘PwC and Mr Boden have admitted that their conduct fell significantly short of the standards reasonably to be expected.
‘The misconduct was extensive, comprising five separate admitted acts in relation to the following areas of the audit: the accrual of bonus payments, certain aspects in relation to the recognition of work in progress and amounts recoverable on contracts, the accounting for a lease, the assessment of the impairment of goodwill, and the calculation of goodwill in relation to a subsidiary.’
At the time the tenth largest auditor in the UK in addition to a rapidly growing financial service firm, RSM Tenon entered administration in 2013 after a series of acquisitions left it laden by debt.
It was subsequently purchased by Baker Tilly. The accountancy regulator noted that proceedings against RSM Tenon’s former finance director Russell McBurnie are still ongoing.