Jessica Fino 27 Feb 2017 12:22pm

FRC investigates PwC's audit of Redcentric

The accountancy watchdog has launched a probe into PwC's audit of the IT services provider

The Financial Reporting Council (FRC) said on Monday that the inquiry relates to financial statements for the years ending 31 March 2015 and 31 March 2016.

Following the conclusion of an independent probe into Redcentric’s accounting practices, the company was forced to restate its consolidated financial statements and other financial information relating to those years.

As a result, the FRC said it would consider issues regarding misstated accounting balances during its inquiry.

In November last year, Redcentric conducted an internal review of its interim results for the six months ended 30 September, where it discovered misstated accounting balances in the group’s balance sheet, prompting the resignation of the company’s CFO.

At the time, Deloitte and law firm Nabarro were called to support the board with its forensic review of the group’s current and historic balance sheets.

The impact of correcting these accounting misstatements resulted in a need to reduce net assets by at least £10m, the company said in November.

A PwC spokesperson said, “We will co-operate fully with the FRC in its enquiries.”