PwC UK could face a lawsuit that runs into the
£100 millions from former client and sub-prime lender Cattles.
Although no claim has been filed, Cattles has
won court approval to demand PwC hand over documents relating to
past audit work. At a pre-disclosure hearing in the UK High Court
in October, PwC also gained the right to access case material being
prepared by Cattle’s lawyers Ashurst.
“We are not aware of a claim against us,” PwC
stated. “In respect of the discovery order, it is a preliminary
process for information sharing between both sides. As previously
stated, we will continue to vigorously defend our work.”
Cattles lawyers Ashurst declined to comment
when contacted by the International Accounting
Bulletin.
Cattles had its shares suspended in 2009 and
is believed to claim PwC had allegedly incorrectly classified loans
that were in long-term arrears and should have been treated as
impaired, and that when the problem was discovered the company was
forced to report a loss of £745m.
According to the UK newspaper The Daily
Telegraph, Cattles alleges between 2005 to 2007 PwC was to
blame for “a gross misstatement at the heart of the accounts” that
ultimately led to numerous profit warnings and left the company
close to insolvency.
The UK Accountancy and Actuarial Discipline
Board (AADB) is also investigating some of PwC’s audit work of
Cattles. The investigation is focused on the preparation, approval
and audit of the financial statements of Cattles and its subsidiary
Welcome Financial Services in the year to 31 December 2007.
