Jessica Fino 30 Jul 2018 11:13am

BT reveals £500m accounting error

BT has disclosed another accounting error after an actuary underestimated the company’s pension deficit by £500m

The telecoms giant said the mistake was an “isolated human error” made by its independent actuary Willis Towers Watson when calculating its IAS 19 accounting pension deficit in March this year.

BT said its pension deficit has now been restated to £3.9bn as of June, from the £5.3bn previously estimated.

The group said in its quarterly results, “We have received certified assurance from the actuary that their quantification of their error is accurate and that there are no other errors as at 31 March 2018.

“We are separately undertaking further review procedures around their calculation.”

The pension oversight follows a separate series of accounting errors at BT’s Italian arm that cost the business £530m and saw its profits fall by 42% last year.

The business was forced to pay a £225m fine to Deutsche Telekom and Orange to settle a claim related to the EE acquisition agreement in 2015.

This led the US Public Company Accounting Oversight Board to join the Financial Reporting Council’s investigation into Big Four firm PwC, which audited BT’s Italian arm for the years 2015 to 2017.

While last year’s scandal hurt the group’s profits and revenue growth, BT said the wrong valuation of its pension deficit will not have an impact in its income, cash flow or final dividend.

In June last year, KPMG won the BT audit contract, replacing PwC, which had been its auditor since it listed on the London Stock Exchange in 1984.