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December 23, 2014

FRC launces second investigation into PwC UK this week

By Isabella Grotto

The UK’s Financial Reporting Council (FRC) has launched an investigation into the conduct of PwC UK as auditor to Barclays Bank.

The investigation relates specifically to PwC’s role in reporting to the UK Financial Services Authority (FSA) on the bank’s compliance with FSA client asset rules between 2007 and 2011.

The FCA’s decision to investigate follows the 23 September 2014 publication of a Final Notice on Barclays Bank.

In the notice, the FCA announced the imposition of a financial penalty of £37,745,000 ($58,748,020) on the bank, discounted 30% following a settlement from the original fine of £53,921,619, for failing to safeguard client assets while contracting with external custodians.

The notice was a result of an investigation that showed Barclays Bank to have contravened the Authority’s client asset rules by failing to notify the FSA on time of the amount of client money and the highest total value of client assets in its possession.

The investigation into PwC announced today will pertain to the firm’s role in Barclays Bank’s failing to report the asset information.

It follows the announcement yesterday that the FRC is to investigate PwC UK over its role in the accounting blunder currently engulfing British grocery giant Tesco.

In May this year, Barclays announced it would be replacing PwC as its auditor by as early as 2016, marking the end of a 120-year relationship.

PwC, which has been Barclays’ auditor since 1896, will not be invited to participate in the bank’s next tender, in a decision is said to be aimed at pre-empting upcoming regulatory changes around audit rotation.

PwC said it will be cooperating fully with the FRC in its enquiries.

Related articles:

FRC to investigate PwC UK over Tesco accounting blunder

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