PwC and former NW senior partner fined over RSM Tenon audit

Nick Boden

Accountancy firm PwC and its former North West senior partner Nick Boden have been fined more than £5m between them for misconduct over the audit of RSM Tenon financial statements in 2011 – before the firm almost collapsed.

RSM Tenon was the UK’s only listed accountancy firm, with Boden its senior statutory auditor and audit engagement partner at the time.

Its problems first emerged when it had to restate its 2011 and 2012 accounts in relation to its accounting policy for referral fees, and errors in recording employee bonuses.

PwC was subsequently replaced as auditor by BDO but RSM Tenon fell into insolvency after failing to pay off its debts and was sold in a pre-pack administration to Baker Tilly in 2014.

The fines and “severe repreimand” for PwC and Boden follow a formal complaint by the Financial Reporting Council’s Executive Counsel last year.

PwC and Boden have admitted that their conduct fell significantly short of the standards reasonably to be expected and that they failed to act in accordance with the ICAEW’s fundamental principle of professional competence and due care.

The misconduct comprised five separate acts in relation to the audit of the accrual of bonus payments; certain aspects in relation to the recognition of work in progress and amounts recoverable on contracts; the accounting for a lease; the assessment of the impairment of goodwill; and the calculation of goodwill in relation to a subsidiary.

PwC will pay a fine of £6m, reduced to £5.1m after a settlement discount, with an additional £500,000 to be paid towards the FRC’s Executive Counsel’s costs.

Boden’s fine is for £150,000, reduced to £114,750.

Proceedings against Russell McBurnie, RSM Tenon Group’s former finance director, are still ongoing.

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