The fallout from the fraud uncovered at BT’s Italian (LON:BT.A) operation caught up with auditor PwC today, which is to be investigated for not spotting what was going on.
Accountancy watchdog The UK Financial Reporting Council has launched a probe into how PwC audited BT’s accounts between March 2015 and 2017.
The FRC said the decision was prompted by “announcements by BT in relation to accounting issues in its Italian operations”.
BT shares slumped by a third after it took a £530mln write-down following an internal investigation that revealed false accounting and dubious “sales, purchase, factoring and leasing transactions”.
Profits at the Italian arm of its Global Services business had been overstated for a number of years the telecoms group concluded, while Gavin Patterson, its chief executive, said the scandal had tarnished the entire company’s reputation.
PwC replaced by KPMG
PWC, which has been replaced by KPMG as BT's auditor, said it would co-operate fully with the FRC in its investigation
In May the FRC fined PwC a record £5m for “misconduct” in relation to its audit of failed social housing group Connaught.
PwC was also the auditor at grocery giant Tesco when it revealed it had overstated profits by £263mln in 2014.
Shares in BT rose 0.5% to 294.5p.