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.