Accountancy watchdog the Financial Reporting Council has issued its largest ever fine to PricewaterhouseCoopers over “misconduct” relating to the audit of failed auditing firm RSM Tenon.
PwC has been fined £5.1m, reduced from £6m following a settlement discount, because of “extensive” misconduct.
The FRC has also issued a severe reprimand and fined Nicholas Boden, a PwC senior statutory auditor and audit engagement partner, £114,750.
RMS Tenon was the UK’s tenth biggest auditor by income fee and was listed on the FTSE SmallCap index but was put into administration in 2013 and sold to rival firm Baker Tilly after acquisitions left it struggling with heavy debts.
The FRC said: “The admitted acts of misconduct include failures to obtain sufficient appropriate audit evidence and failures to exercise sufficient professional scepticism.”
The misconduct related to the audit for the financial year to the end of June 2011 and includes five separate acts.
These include misconduct around the accrual of bonus payments, certain aspects in relation to the recognition of work in progress and amounts recoverable on contracts, and the calculation of goodwill in relation to a subsidiary.
PwC will also have to pay £500,000 towards the FRC’s costs.
Proceedings against Russell McBurnie, RSM Tenon’s former finance director, are still ongoing.