The Financial Reporting Council (FRC), which monitors and enforces accounting standards, has said it will investigate audits by PricewaterhouseCoopers (PwC) of BT's financial statements from 2015 to 2017. The investigation relates to BT’s Italian division, BT Italia, where a £531M fraud is alleged to have been committed by employees.
FRC investigators will be looking to see how the fraud failed to show up on the audits. Reports into the scandal have indicated that contracts, invoices and revenue from BT-installed phone lines were inaccurately recorded or exaggerated by staff so that they could show they had met targets.
The FRC is partially funded by the U.K. government, and has the power to issue fines or bans to companies it deems to be found in serious breach of its rules.
Although this case is an Italian one, it indicates that the FRC is now looking to take on a role similar to the Serious Fraud Office (SFO) by investigating major business crime cases.
Accountants and auditors are surely aware of the standards they must maintain. But they must also recognise what they must do to keep maintaining them. We have been warning accountants of the need to ensure this for a number of years.
Read our article: CALLED TO ACCOUNT