The Financial Reporting Council (FRC) has given PwC a £4.55m fine for failing to challenge management at IT management firm Redcentric, where a £15m black hole was later uncovered in its books.
The FRC handed the accounting firm the fine after they showed a “serious lack of competence” in their audit work.
The accounting watchdog said that partners at the firm committed a number of policy breaches relating to their “failure to exercise professional scepticism.”
Claudia Mortimore, deputy executive counsel to the FRC said, “The sanctions reflect the seriousness and extent of the breaches. Professional scepticism was lacking in this audit.
“Had it been applied, it is likely that certain material misstatements would have been detected.
“As this is the second final decision notice involving PwC Leeds’ office in recent years, we have mandated that the firm supplements its ongoing monitoring and support for that office, to further improve the quality of audit work in the future.”
A PwC spokesman said, “Since the work in question was completed we have taken numerous steps to strengthen processes.
“Our audit quality action plan has three key areas: additional investment in training, people and technology; further alignment of PwC’s audit business behind audit quality; and a reinforced focus on culture and quality control.”