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PwC fined £15m over failure to report London Capital & Finance suspicions
(Sharecast News) - The Financial Conduct Authority has fined PwC £15.0m for failing to report its belief that London Capital & Finance may be involved in fraudulent activity, marking the first time the regulator has fined an audit firm. PwC encountered significant issues throughout its 2016 audit of LCF, with a senior individual at LCF acting aggressively towards auditors, and the firm providing PwC with inaccurate and misleading information.
"LCF's actions, and PwC's own work on the audit, led PwC to suspect that LCF might be involved in fraudulent activity. PwC was duty-bound to report those suspicions to the FCA as soon as possible, but they failed to do so," said the FCA.
The FCA added that PwC eventually satisfied itself that LCF's 2016 accounts were accurate. However, whether or not its suspicions remained, the watchdog stated PwC still had an obligation to report its previous concerns to the FCA.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: "There were a number of red flags that led PwC to suspect fraud. They should have acted on them immediately. Their failure to do so deprived the FCA of potentially vital information."
Reporting by Iain Gilbert at Sharecast.com
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