Please ensure Javascript is enabled for purposes of website accessibility

PwC Has Gotten the U.K. Audit Cops’ Attention

Posted on by Jason Bramwell

The press release the U.K. Financial Reporting Council sent out earlier today was short and sweet—all of 64 words—but it likely sent a shiver down the spines of TPTB at PwC:

The Financial Reporting Council (“FRC”) has commenced an investigation into PwC LLP in relation to its audit of the consolidated financial statements of Wyelands Bank plc for the year ended 30 April 2019.

The decision was made at a meeting of the FRC’s Conduct Committee on 15 June 2021.

The investigation will be conducted by the FRC’s Enforcement Division under the Audit Enforcement Procedure.

 

The FRC issued a separate similar press release this morning saying it was also investigating the U.K. audit firm Saffery Champness for its audit of the financial statements of Greensill Capital Ltd. for the year ended Dec. 31, 2019.

So what does one have to do with the other? According to Reuters:

Wyelands Bank is owned by steel tycoon Sanjeev Gupta’s metals-to-finance empire GFG Alliance, which it financed. GFG Alliance was closely linked to financing company Greensill Capital which went bust earlier this year.

And there it is.

Huw Jones of Reuters goes on to write:

The Bank of England forced Wyelands to hand back 210 million pounds ($291.82 million)of deposits to around 4,000 savers in February this year after concerns emerged over how the bank was financing GFG Alliance.

A month later, Greensill Capital filed for insolvency after losing insurance coverage for its debt repackaging business, saying that its largest client, GFG Alliance, had started to default on its debts.

Britain’s Serious Fraud Office said in May it was investigating “suspected fraud, fraudulent trading and money laundering” in relation to the financing and conduct of business of companies within GFG, including financing arrangements with Greensill Capital UK Ltd.

FRC investigations usually move at a snail’s pace, so it’ll likely be a while before we find out what type of slap on the wrist, if any, PwC and possibly its engagement partner for the Wyelands audit will receive from the FRC.

UK watchdog investigates Greensill and Wyelands Bank auditors [Reuters]

Related Posts

Allegedly, a Few Ernst & Young Partners Just So Happened to Join PwC

Never having the pleasure of attending a partner-only soiree, we don’t have much knowledge about the haps at these events but we do imagine catering slightly better than what you would find at an in-house training but served by oompa loompas. And an open bar, natch.

Likewise, we’ve never heard about Big 4 partner mixers where, for example, an PwC partner might chat up a E&Y partner talking IFRS, where they fall on the staff’s hottie list and “oh by the way, waddaya say you join our firm?” To save face, we imagine said E&Yer responding with a “No, I will not make out with you” retort followed by open-faced slaps and ripped Jos. A. Bank until the beefy security pulled the two apart (at which point the P. Dubs partner gives his target the “call me” sign).


We bring all this up because the Times Online reports that there has been a fair amount of defection from Ernst & Young to PricewaterhouseCoopers in the Middle East (no sissies allowed). PwC’s Middle East practice was purchased by the UK firm last year and now the Times reports that 20 E&Y partners have been poached by P. Dubs:

According to people familiar with the situation, the defections — amounting to almost a fifth of Ernst & Young’s partners in the Middle East — were in several locations across the region. Most were from Ernst & Young’s consulting business, The moves began last summer but were kept secret because of a settlement between the two firms. PwC agreed that it would not approach any more Ernst & Young staff in return for Ernst & Young agreeing not to take legal action to block the departures.

Neither firm would comment for the Times article except to boast about their numbers in the region, “PwC confirmed that it had recruited 25 new partners and 400 staff in its Middle East offices in the past 12 months,” and “A spokesman for Ernst & Young said that it remained ‘easily the largest’ of the Big Four in the Middle East,” so both firms’ communication departments seem to be operating as normal.

Whether such (alleged) deliberate defections have happened in the States, we don’t know but we hear it is quite the spectacle (marched out by the OMP the second the news got dropped) when one partner notifies his/her intent to leave for a competitor, so all out war could reasonably be expected.

PwC raids rival before Middle East step [Times Online]

Layoff Watch ’20: PwCer Claims Performance Ratings Are Purposely Being Bumped Down to Make Separation Decisions Easier During the Pandemic (UPDATE)

[Updated on July 17 with additional comments.] Two people who currently work at PwC in […]

punishment chair in the corner

KPMG Got Extra Roasted By the FRC Thanks to the Firm’s “Poor Disciplinary Record”

Both KPMG and PwC have been fined by the Financial Reporting Council (FRC) in relation […]