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(Alliance News) - The UK's accountancy regulator has fined PricewaterhouseCoopers GBP1.8 million over its work on FTSE 100-listed BT Group PLC's financial 2017 audit.
The fine was lowered from GBP2.5 million, the Financial Reporting Council noted following PwC's early admission.
The FRC said both PwC and Richard Hughes, who was the audit engagement partner, admitted breaches of the rules in relation to their audits of the financial impact disclosed by BT in the wake of fraud in the telecoms giant's Italian operations in 2016.
BT revealed a hit of around GBP513 million from the Italian accounting fraud, as well as debt adjustments of GBP72 million, in its accounts to the end of March 2017, which were examined by PwC.
The FRC added: "The respondents did not approach the audit of BT's treatment of the debt adjustments with the necessary professional scepticism and they failed to adequately document their audit work across the entirety of the BT Italy adjustments."
The regulator did stress that BT's financial 2017 results were not misstated or that its adjustments were incorrect.
"In determining the financial impact of a major fraud detected within a business, difficult but important issues relating to appropriate accounting treatment and disclosures will need to be addressed," FRC's Deputy Executive Counsel Claudia Mortimore said.
"It is vital that these are subject to robust audit so that the users of financial statements can have confidence that the financial impact is properly and accurately stated in subsequent financial statements. The sanctions imposed in this case, where certain elements of the adjustments following a fraud were not subject to the required level of professional scepticism, underscore this message and will serve as a timely reminder to the profession."
Shares in BT were up 0.8% at 160.75 pence on Monday morning in London.
By Paul McGowan; paulmcgowan@alliancenews.com
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