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The UK accounting regulator has fined PwC £2.9mn for failures in its audit of Wyelands Bank, the lender that was owned by steel magnate Sanjeev Gupta and collapsed in scandal.
The Big Four firm admitted it had breached several requirements relating to the audit of the Wyelands Bank’s 2019 accounts, including in its risk assessment and vetting of the lender’s related party transactions, the Financial Reporting Council said on Tuesday.
Gupta established Wyelands Bank in 2016, with the stated ambition of supporting UK industry, but in 2021 the Prudential Regulation Authority ordered the lender to repay customers deposits amid concerns over its financial position.
The move by the PRA came after an investigation by the Financial Times revealed that Wyelands Bank had funnelled depositors’ money into the GFG Alliance, Gupta’s wider business empire.
Jonathan Hinchliffe, the partner responsible for signing off the audit report for PwC, was also fined £33,412 and reprimanded by the FRC.
Claudia Mortimore, the deputy executive counsel at the FRC, said: “In this audit, the risks around the bank’s membership of and involvement with the GFG Alliance were not properly recognised and considered, despite clear warnings to the bank from the PRA.”
PwC said on Tuesday: “We acknowledge and apologise that aspects of this piece of work fell short of the required standards. Since 2019, we have undertaken a multiyear programme to enhance audit quality and have, as a result, seen significant changes to our audit practice.”
PwC’s penalty was cut from an initial £4.5mn, a reduction the FRC said reflected the Big Four firm’s co-operation. Hinchliffe’s fine was also reduced from an initial £55,000.
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