Jessica Fino 20 Mar 2017 12:24pm

FRC launches internal probe after leaking of judgement against PwC

The UK accountancy watchdog is launching an investigation after one of its members leaked a confidential judgement against the Big Four firm to the press ahead of the hearing

During the hearing on Thursday, the Financial Reporting Council (FRC) suggested a record fine of £6m as a result of mistakes made during PwC's 2009 audit of Connaught.

It came after a five-year inquiry by the FRC into the audit of the collapsed social housing maintenance group.

Stephen Wooler confirmed the guilty verdict to Frances Gibb, legal editor of The Times, the Financial Times reported. According to the newspaper, this could put him in contempt of court.

He said in an email seen by the FT, “The judgement has now been delivered to the parties but not published. However, you can infer that PwC has been found guilty of professional misconduct (at least on three out of four charges) from the fact that there is a sanctions hearing this Thursday.”

Stanley Burton, the tribunal chairman, asked the FRC to investigate the leak and report its findings back to him.

“The object of Mr Wooler was clearly to gain publicity when nothing relating to these proceedings should have been known publicly. We regard his breach of confidence as extremely serious,” the FT quoted Burton as saying.

An FRC spokesperson said, “We take breaches of confidentiality seriously and will investigate the matter thoroughly.”

Commenting on the probe, PwC said, “We are concerned by the breach of confidentiality and welcome the tribunal's request for an investigation.

“We are confident that the FRC will conduct a thorough investigation and wait to hear the outcome."

The accountancy watchdog said during the hearing that PwC “failed to act with competence and due care”. The Big Four firm admitted failure to exercise appropriate scepticism or gather sufficient evidence while auditing Connaught, but argued that they had been misled by the company’s management.

As well as recommending the £6m fine, the retired partner Stephen Harrison, who oversaw the audit, was also asked by the FRC to pay a fine of £200,000.

An FRC spokesperson said at the time that the chair of the tribunal would be publishing his report “in due course”.