Audit regulator, the Financial Reporting Council (FRC), has fined PricewaterhouseCoopers (PwC) £3.1m for 'serious breaches' in its audit work on defence and aerospace group Babcock International.
The FRC found that PwC had failed to properly investigate concerns over Babcock's financial reporting, including a potential £150m loss related to a contract with the UK Ministry of Defence.
PwC's audit partner, Ian Ball, has also been censured by the FRC. The regulator said that Ball had failed to take adequate steps to address concerns over Babcock's financial reporting.
The FRC's investigation found that PwC's audit team had not adequately investigated concerns over Babcock's accounting for a contract with the UK Ministry of Defence. The contract was valued at £2.3bn and the FRC found that PwC had failed to properly consider whether the contract was at risk of being terminated.
PwC has said that it accepts the FRC's findings and has taken steps to improve its audit processes. The firm has also said that it is committed to providing high-quality audit services.
The FRC's investigation into PwC's audit work on Babcock is the latest in a series of high-profile audits to be scrutinised by the regulator. The FRC has been pushing for greater transparency and accountability in the audit industry.