PwC is under investigation by the accounting watchdog over BT audits

PwC is under investigation by the accounting watchdog over BT audits

The Financial Reporting Council (FRC) said that, following initial enquiries, it was looking into audits carried out by the accounting giant of BT’s financial statements over three years.

BT has warned that the scandal will affect its results for the next two years.

The UK’s corporate governance regulator is to investigate BT’s former auditor PwC, following the accounting scandal in the operator’s Italian division.

FRC has open investigations into each of the “Big Four” global accounting firms, which include PwC.

BT said it noted the announcement but that it would be inappropriate to comment further. The company began conducting its own internal investigation in October 2016. With the company itself or the accountant responsible for checking its books?

According to the annual report, the independent investigation ‘revealed improper accounting practices and a complex set of improper sales, purchase, factoring and leasing transactions in our Italian business.

BT said this month it would drop PwC, its auditors since 1984, after an evaluation found “areas for improvement”.

‘The investigation identified collusion, circumvention and override of controls within our Italian business that was not identified by our monitoring controls thereby resulting in the misstatement of results going undetected for a number of years’. European boss Corrado Sciolla left in the wake of the scandal. “The regulator has a duty to investigate where they believe there is a public interest, in order to give confidence to the financial markets”, it said. “Audit quality is of paramount importance to the firm”.

In May the FRC fined PwC a record £5m for “misconduct” in relation to its audit of failed social housing group Connaught.