UK regulator extends probe into PwC audits

LONDON, Jan 17, 2022 (AFP) – Britain’s accounting watchdog on Monday broadened a probe into financial services firm PricewaterhouseCoopers over its audits of UK defence group Babcock International.

The Financial Reporting Council revealed it had “commenced an investigation into the statutory audits” of Babcock’s 2018/2019 and 2019/2020 annual results after the company uncovered vast errors in recent earnings.

PwC added in a reaction that it will “cooperate fully” with the regulator, and stressed that audit quality was of “paramount importance” to the group.

The FRC was already investigating aspects of PwC’s audits on Babcock’s earnings for 2016/2017 and 2017/2018.

After conducting its own review, Babcock recently revealed it had made 140 adjustments totalling about £2 billion ($2.7 billion, 2.4 billion euros).

Those adjustments “related to a mixture of changes in estimates, the correction of prior year errors and a change in accounting policy”, the company stated in December.

Babcock is the second-biggest defence equipment supplier to Britain’s Ministry of Defence, after BAE Systems.

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