The financial watchdog has handed PwC and one of its employees fines of around £5m for the auditing of two construction companies.
The Financial Reporting Council (FRC) said on Tuesday, June 7, that PwC and audit engagement partner Jonathan Hook would also face "severe reprimands".
The fines are linked to the audit of Kier Group’s financial results for the year ending June 2017 and Galliford Try’s results ending June 2019.
PwC was initially fined £5.5m for its auditing of Galliford Try, which was reduced to just over £3m for "exceptional levels" of cooperation and for admissions. For Kier, the Big Four firm was initially fined £3.35m, which was later reduced to £1.95m.
Meanwhile, Mr Hook was given a £240,000 fine for his involvement in both audits, which was reduced to just over £135,000 for early admissions and cooperation.
Claudia Mortimore, deputy executive counsel of the FRC said: "Rigorous auditing of long-term contract accounting is particularly important in the audit of construction companies, where many contracts are spread over a number of years.
"Auditors must not only ensure that they obtain sufficient appropriate audit evidence to support the accounting of the contracts, but also apply sufficient professional scepticism. This is vital so that investors can have confidence in the financial statements."
Ms Mortimore said those involve had accepted there were deficiencies in the work performed.
She added: "In the intervening years, PwC has introduced a number of initiatives aimed at improving the quality of audit work in this area. In addition to the financial sanctions, the non-financial sanctions require PwC to review long-term contract audit work in subsequent audit engagements and to report to the FRC as to the efficacy of the initiatives it has introduced.”