The FRC’s Accountancy and Actuarial Discipline Board (AADB) has revealed it will finally investigate PwC’s role as auditor of RSM Tenon.
As predicted by The Times back in April, the AADB will carry out an investigation into PwC and certain members of the ICAEW following consultation with the institute.
The scope of the investigation covers the conduct of members in relation to:
- the preparation, approval and audit of the financial statements of RSM Tenon Group and its subsidiary companies for the years ended 30 June 2010 and 2011
- the preparation, approval and review of financial information in connection with the admission of RSM Tenon Group to the main market of the London Stock Exchange and the acquisition of RSM Bentley Jennison
The audit of RSM Tenon was brought to the attention of the AADB at the start of the year with the firm’s prior year adjustment and goodwill impairment, followed by a company revaluation.
An AADB spokesperson told AccountingWEB: “This series of events raised questions about how accurate their accounts were, which in turn prompted questions about the role of the auditors.”
The board also said the scope of the investigation “will not be huge” as it looks at just two years of accounts and the firm’s specific admission to the London Stock Exchange.
In February Tenon told investors it would be restating its accounts after it found “significant errors” in its 2010 earnings, which saw overall profit drop to £683,000 from £7.5m.
This was followed by the departure of key members of the executive team, including chief executive Andy Raynor and chairman Bob Morton. It then announced it would slash employee numbers by 10% as it posted a loss of £70.6m for the six months to December 2011.
PwC have previously claimed RSM Tenon misled them during its audit work and had flagged up accounting issues to Tenon's audit committee.
The firm said in a statement today: “We will be cooperating fully with the AADB investigation. We will be vigorously defending our audits and other work carried out for the RSM Tenon Group.”
In January, following a year-long investigation, the AADB fined PwC £1.4m for failures concerning reports on client-money accounts at JPMorgan’s London securities unit.