The results of BT’s Italian operations had been overestimated for years and financial transactions had been distorted.
PwC was fined 1.75 million pounds (just over 2 million euros) in the United Kingdom for “shortcomingsin the audit of the accounts of the operator British Telecom for 2016-2017, in the wake of a resounding accounting scandal in Italy.
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The results of BT’s Italian operations had been greatly overestimated for many years and countless financial transactions had been distorted, which had forced the group to revise downwards their value in its accounts. “The scale of the fraud was such“that BT had to publish for its financial year ended at the end of March 2017”adjustments of approximately 513 million pounds(609 million euros), said the British accounting regulator (FRC) on Monday in a press release.
The audit monitored by the British authorities
BT had recognized these accounting concealments at the end of 2016, before being forced to clearly note the financial impact, and the FRC had announced in June 2017 the opening of an investigation into PwC’s audits. The cabinet lacked the “heightened professional skepticism“which he should have demonstrated in the context of this affair and he did not in particular “not properly assessed whether the accounting changes were appropriate“, notes the FRC. However, the regulator’s investigation did not reveal that BT’s accounts or “the total sum of the adjustmentswere erroneous, nor that “the breaches were intentional, dishonest or reckless“, specifies the press release.
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The audit sector is in the crosshairs of the British authorities, pointed out for not having seen resounding bankruptcies coming in recent years: those of the chain of stores BHS in 2016 (PwC), of the construction group Carillion in 2018 (KPMG) or the tour operator Thomas Cook in 2019 (EY). London recently clarified its plans to reform the audit sector, but the government has scaled back its ambitions, particularly on the criteria that will bring large unlisted companies under the control of the regulator, attracting reviews.
This reform has been long overdue and is dragging on. The tabling of a bill will take several more months.
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