PwC fined £5M for audit misconduct in U.K.

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PricewaterhouseCoopers’ firm in the United Kingdom was fined a record £5 million ($6.4 million) by the U.K.’s Financial Reporting Council for its audits of Connaught, a social housing maintenance business that collapsed in 2010.

PwC was also ordered Thursday to pay the FRC Executive Counsel’s costs and to make an interim payment on account of £1.5 million ($1.93 million). The FRC also fined a retired PwC audit partner, Stephen Harrison, £150,000 ($193,000).

The Financial Reporting Council conducted an investigation and a 12-day hearing by an independent Tribunal chaired by Sir Stanley Burnton and found misconduct in three auditing areas: mobilization costs, long-term contracts and intangible assets.

The firm issued a statement apologizing for its work. “We are sorry that our work fell short of professional standards,” said a PwC U.K. statement. “Since 2010 when the case began, we’ve worked hard to improve our procedures and processes. Audit quality is of paramount importance to PwC and the FRC’s annual audit quality assessments have shown a trend of improvement in our work over several years.” Harrison could not be reached for comment.

Connaught, which maintained affordable housing for British residents, needed to appoint administrators in September 2010 after it failed to secure financing from lenders. In June, U.K. housing authorities suddenly announced they were delaying several housing upgrade projects in response to the government’s planned budget cuts.

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