PwC is under investigation by the UK accounting regulator over its auditing of Intu Properties, the shopping centre owner that fell into administration in 2020.
The Financial Reporting Council said on Thursday that it had launched a probe into the Big Four firm’s audits of Intu’s accounts for 2017 and 2018. The regulator did not provide further details.
The investigation brings to five the number of publicly announced probes into PwC’s audits of UK companies. The FRC is already examining its work signing off the accounts of Babcock, Wyelands Bank, London Capital & Finance and Eddie Stobart Logistics.
The firm, whose partners received a record average profit share of more than £1mn each last year, was fined twice in one day last June when it was ordered to pay £5mn for failings at construction and outsourcing companies Kier and Galliford Try. It was also ordered to pay £1.75mn for problems in its auditing of telecoms group BT.
Intu, whose malls included the Trafford Centre in Manchester and Lakeside in Essex, was once the UK’s biggest shopping centre owner and reached a peak market valuation of £4.9bn in early 2015.
A huge debt pile and a shift away from bricks-and-mortar retail contributed to its decline in fortunes. It called in administrators from KPMG in June 2020 as the effect of the coronavirus pandemic pushed the company over the precipice.
PwC had audited Intu, previously named Liberty International, for almost four decades before stepping down at the end of 2018.
It was replaced in 2019 by Deloitte, which flagged a material uncertainty about Intu’s ability to continue as a going concern.
PwC said it would co-operate fully with the FRC’s inquiry. “Delivering consistently high quality audits remains our primary focus and we continue to make significant investment in our audit practice,” it said.
There was no causal link between the area of the audit being investigated and Intu’s eventual collapse, said a person familiar with the matter.
The investigation is focused on PwC and not Intu. The FRC has no power to investigate company directors for failing to prepare proper financial statements unless they happen to be accountants.
The investigation is being carried out under the FRC’s audit enforcement procedure meaning any fine against PwC would be paid to the Treasury.
