A hefty fine of £15m has been imposed on the accounting behemoth PwC by the financial regulatory authority, marking the first-ever financial penalty levied on an audit firm.
PwC, one of the prominent big four accounting entities, was reprimanded by the Financial Conduct Authority (FCA) for overlooking several audit warning signs and neglecting to promptly report suspected misconduct at a collapsed financial services enterprise.
PwC had been responsible for auditing the firm, known as London Capital & Finance (LCF), and had been assigned the duty of authenticating the company’s financial records.
Despite harboring suspicions of fraudulent activities at LCF and being obligated to notify the regulator about these suspicions, PwC endorsed the financial records without hesitation.
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Even after confirming the accuracy of LCF’s 2016 financial statements, PwC still had a responsibility to disclose previous concerns, as stated by the FCA.
PwC was expected to “act promptly” instead of delaying action, according to the FCA. “Their failure to do so deprived the FCA of potentially critical information.”
Former investors have labeled LCF as a Ponzi scheme. The financial regulatory body has also criticized the organization for its “deceptive and unjust” promotion of a financial instrument known as minibonds
In response to the penalty, PwC stated: “We have come to an agreement with the FCA to resolve an inadvertent reporting violation.”
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