Accountancy regulator launches PwC BT probe

Earlier this month KPMG replaced PwC as auditor of BT, ending PwC’s 33-year association with the telecoms giant as a result of the affair.

BT’s review of its accounting practices was prompted after a whistleblower exposed fraud at BT Italia, triggering a £530m write-off and wiping a fifth off the telecoms group’s market value in January.

BT has since been blighted by claims of “inappropriate management behavior” and “historic accounting errors.”

Now the Financial Reporting Council (FRC) has announced that it would be investigating the audits by PricewaterhouseCoopers LLP (PwC) of BT’s financial statements from 2015 to 2017.

It added that the investigation related to the scandal of the telecommunication giant’s Italian division, called BT Italia.

Stressing that the FRC investigation did not mean there was an assumption of blame a PwC spokesman said: “We will continue to co-operate fully with the FRC in its enquiries. The regulator has a duty to investigate where they believe there is a public interest, in order to give confidence to the financial markets.”

He added: “Audit quality is of paramount importance to the firm. The FRC’s annual reviews of our audit work, policies and procedures show a continued trend of improvement in our work and we use the FRC’s insights, together with our own reviews, to continuously improve how we deliver high quality audits.”

The FRC is partially funded by the U.K. government and has the power to issue fines or bans to companies it deems to be found in serious breach of its rules.