"We are sorry that aspects of the audit carried out in 2011 fell short of professional standards. We cooperated fully with the FRC during its lengthy investigation and accept its findings."
PricewaterhouseCoopers and a Senior Statutory Auditor have been fined and 'severely reprimanded' by the Financial Reporting Council after admitting misconduct in relation to the audit of professional services firm RSM Tenon Group.
RSM Tenon Group offered risk management, tax, recovery, financial management and business advisory services. It went into insolvent administration in 2013 and its trading subsidiaries were purchased by Baker Tilly UK Holdings Ltd.
The audit covered the financial year ended 30 June 2011 and both PwC and Nicholas Boden admitted acts of misconduct including failures to obtain sufficient appropriate audit evidence and failures to exercise sufficient professional scepticism.
The Financial Reporting Council described the misconduct as "extensive", comprising five separate admitted acts in relation to: the accrual of bonus payments, certain aspects in relation to the recognition of work in progress and amounts recoverable on contracts, the accounting for a lease, the assessment of the impairment of goodwill, and the calculation of goodwill in relation to a subsidiary.
The FRC has therefore issued PwC with a fine of £6,000,000 reduced to £5,100,000 after a settlement discount as well as a sum of £500,000 to be paid towards the FRC’s Executive Counsel’s costs.
Boden received a fine of £150,000 reduced to £114,750, after adjustment for mitigating factors and a discount for settlement.
Proceedings against Russell McBurnie, RSM Tenon Group's former Finance Director, are still ongoing.
In a statement, PwC said: "We are sorry that aspects of the audit carried out in 2011 fell short of professional standards. We cooperated fully with the FRC during its lengthy investigation and accept its findings.
"We continually review and update our audit processes in response to both internal reviews and external inspection findings. Audit quality is of paramount importance and our annual audit quality reviews show year-on-year improvements."