Watchdog investigates Big Four firm after £20m ‘misstatement’
Accounting watchdog the Financial Reporting Council is investigating PwC after IT services firm Redcentric revealed a £20.8m black hole in its books.
The FRC has launched an investigation into the conduct of accountants PwC during Redcentric’s accounting period to March 2015 and March 2016.
The misstatements were revealed in November 2016 after an internal investigation which led to the departure of CFO Tim Coleman.
The Harrogate-based company’s share price dropped more than 70% on the announcement and new CFO Pete Brotherton took over the job before December.
Redcentric announced in late 2016 that a forensic investigation by Deloitte and Nabarro had led to a restatement of the company’s finances.
It found that the cumulative overstatement of assets and pre-tax profits over the stated two years was approximately £20.8m.
The FRC said its investigation would consider, but not be restricted to, issues regarding misstated accounting balances.
A spokesperson from PwC said: “We will co-operate fully with the FRC in its enquiries.”
In a stressful week for PwC, it has also had to apologise this week after a mishap at the Oscars, in which presenters Warren Beatty and Faye Dunaway presented the Oscar for Best Picture to La La Land, instead of the rightful winner Moonlight.
Redcentric listed on the AIM in 2013 following a demerger from Redstone.
In its most recent update, revenue for the half year to 20 September was up 2% to £53m, and pre-tax profitability returned, making £320,000 in pre-tax profits compared to a restated loss of £2.5m in the same period in 2015.
