The Financial Reporting Council (FRC) hit auditor PriceWaterhouseCoopers with a reduced fine of £2.3m and a £750,000 contribution to the executive counsel after the firm admitted its own conduct fell short over lenders Cattles and Welcome Financial Services' financial reports.
PWC was also severely reprimanded for its lack of rigour during the audit and its failure to spot the lack of provision for impairment failings.
It failed to get sufficient audit evidence on the loan loss provision, failed to identify the fact that the impairment policy was not adequately disclosed and that the disclosures in those financial statements were uncompliant.
The partner, Simon Bradburn, agreed a personal fine of £120,000 reduced to £75,600 and a severe reprimand.
PWC’s settlement was also reduced from £3.5m to £2.3m also after a discount.
Gareth Rees QC, the executive counsel to the FRC, said: “The substantial fines imposed in this case reflect the seriousness of the audit failings in relation to the critical area of impairment provisioning in a sub-prime lender and will send a strong signal to the audit community of the importance of upholding high standards of professional conduct in audit work. I welcome PwC’s and Mr Bradburn’s constructive approach which has enabled us to reach this settlement. The admissions of misconduct have resulted in a significant saving in time and costs and the fines ultimately imposed have been reduced accordingly.”
The FRC is the disciplinary body for accountants and actuaries and responsible for promoting high quality corporate governance and reporting to encourage UK investment.
Victoria Hartley is contributing editor at Mortgage Solutions, Specialist Lending Solutions, Your Money and Your Mortgage at London-based publishing company AE3 Media.
She has an MA in Radio from Goldsmiths after gaining a 2:1 in a Comparative American Studies BA at Warwick University. She also holds a TEFL qualification and taught overseas in Mexico and Japan from 1994 to 1997.
Her role includes editorial oversight of the news, analysis and features, event content management and strategic and editorial consultancy for the AE3 Media group. She is an experienced video, broadcast and live-event host and regularly chairs web and podcast debates and interviews.
Multiple award nominations have resulted in two wins: Santander Media Awards, trade journalist of the year and Headlinemoney Awards, mortgage journalist of the year (B2B). Here is one of the award-winning pieces: https://www.mortgagesolutions.co.uk/news/2011/07/21/exclusive-tale-bailey-fraud-witness/
Previous roles include editorships of Mortgage Solutions, consumer title What Mortgage and trade title Credit Today as well as a stint freelancing for a variety of outlets including The Guardian and Which? Money.
