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PwC under fire over RSM Tenon audit

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17th Apr 2012
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Big Four firm PwC is in the spotlight again over its audit of RSM Tenon during a turbulent period for the listed accountancy firm.

Following PwC’s grilling in connection with JP Morgan, the Accountancy & Actuarial Discipline Board (AADB) is now a “matter of weeks away” from an inquiry into the audit work carried out by PwC in relation to Tenon, according to The Times.

However an AADB spokesperson told AccountingWEB that they were not able confirm or comment on whether they were going to investigate, but added it could take some time to move forward with an investigation: “If we got a complaint from someone we would do our own research into what information was available to us and it would take a couple of weeks to put together a report for the board so that they could make an assessment and decide whether or not the criteria for an investigation were met. Then we would have to consult with the professional bodies before confirming whether or not we were going to investigate,” the spokesperson said.

The news follows reports in The Times that Tenon’s new management team had “called in lawyers” over alleged auditing errors made by PwC, which it claimed had contributed to the collapse of a potential buyout by private equity firm HG Capital.

The appointed law firm, Reynolds Porter Chamberlain, advised that Tenon may have a legal claim against the auditor; however PwC has since hit back claiming they were misled "through both omission and deliberate misrepresentation".

At the start of the year RSM Tenon told investors it would be restating its accounts after discovering a number of accounting ‘black holes’ in its books.

This was then followed by the departure of key members of the executive team, including chief executive Andy Raynor and chairman Bob Morton.

Tenon admitted to "significant errors" in its last full-year financial statements, including in the way it accounted for employee bonuses and revenues from some contracts; and by February announced it was slashing employee numbers by 10% as it posted a loss of £70.6m for the six months to December 2011.

On whether they made an official complaint to the AADB, an RSM Tenon spokesperson said: “The Times article came from a leaked email, so we do not wish to comment on this at the moment.”

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7om
By Tom 7000
18th Apr 2012 12:15

Tenon

I have said this before, you cannot expect the directors of companies to know how auditing and accounting rules work, they are not experts at this they are experts at making biscuits or steel girders or whatever they do, its just not right to expect them to understand the complexities....what do Tenon do?

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Replying to WhichTyler:
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By KenKLM
18th Apr 2012 12:39

Tenon

I thought directors have a legal responsibility to be aware of the business' current position and if they are incapable of understanding profit and loss , balance sheet and valuations then they should not get paid exhorbitant salaries to be in that position. I think the clue is in the number of executives jumping ship ? Business is not a huge mystery and auditors can only audit what is put in front of them . If the auditors then get it wrong , as the big four seem to on a regular basis , then I hope they are taken to the cleaners . The only problem with that is my PII will go up again !!

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By 1146ben
18th Apr 2012 12:25

Tenon

Tom 7000 - I assume this is a a tongue in cheek comment?

Tenon are an audit & accountancy firm, with Andy Raynor having trained as an auditor. He must have signed off well over 100 audit reports during his time as a audit partner at BDO in Nottingham before it was bought by Tenon.

I struggle to think of a better background to have as CEO when it comes to knowing how auditing and accounting rules work, not to mention a substantial level of in house expertise to provide advice if required.

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By max.lee
18th Apr 2012 12:25

what Do they do/

err.......... Audit and Risk management National Firm of the Year - British Accountancy Awards 2011

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7om
By Tom 7000
18th Apr 2012 12:57

Tenon - accountants?

Are they? good lord, surely not... they can't be..... not with the amount of adjustments the new chap had to do to the old accounts after A R left. And besides it says they made a £70m loss,  if they were accountants they would be financially aware as Ken KLM says above  not to allow this to happen

Nope  1146 Ben you must be mistaken....can anyone else confirm this?

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pic
By jndavs
18th Apr 2012 14:02

Tenon
To quote from their website:
"A firm you can rely on
RSM Tenon offers intelligent accountancy and business advisory services"

They even do corporate recovery!

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By TOC
18th Apr 2012 14:15

It would be laughable if it wasn't tragic.

This shower have probably managed to give the impression that all accountants are numpties who can't look after their own finances never mind clients.

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Time for change
By Time for change
18th Apr 2012 14:33

Well at least

PWC and RSM Tenon can relax in the knowledge that "we're all in this together" (presumably the smelly stuff) just like George Osborne wants!

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Replying to AANM:
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By Katy D
18th Apr 2012 18:57

no doubt when the proverbial does hit the fan PwC will be argiung that "it never lands evenly" !

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By Roland195
18th Apr 2012 14:53

Quis custodiet ipsos custodes?

If for some reason I had to make corrections to my accounts to the extent allegedly the case here, would my own credibility as an accountant & auditor not be called into question?

 

 

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By The Limey
18th Apr 2012 15:29

With Tenon's restatement, the real question is how much of the restatement was actually changes in estimates (and therefore should not have been restated)? It looked like a kitchen sink job to me.

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By The Minion
19th Apr 2012 08:54

I have just received

a letter from RSM tenon inviting a client of mine to a seminar on how to build their business, value it and sell it on.

 

I assume this is one of the better examples of "Do as I say, not as I do...)

 

Oh and it also goes on to say they can minimise tax liabilities.

 

I assume this starts off with "Make a big loss then your tax worries are over!"

 

Presumably there is also a sideshow of "How to make a small fortune - start with a big one"

 

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By nganduk
20th Apr 2012 12:29

I can only imagine being rejected a job offer by Tenon because I am I don't meet their "competence" levels.

Obviously the guys knew what they were doing, and I think it is called fraud!

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