PwC handed £5m fine for Kier and Galliford Try audits

Aaron Morby 3 weeks ago
Share

The Financial Reporting Council has fined leading accountant PwC and former partner Jonathan Hook over audit failures for Galliford Try and Kier.

The breaches concern failures to properly audit revenue recognised under specific complex long-term contracts.

This involved a lack of insufficient challenge of management’s assertions and lack of professional scepticism.

PwC was fined just over £3m for failure to adequately challenge revenue and costs recognised by Galliford Try’s management on large and complex long term construction contracts during 2018 and 2019 audits.

The fine was reduced from £5.5m reflecting PwC’s cooperation during the investigation.

Similarly, PwC was fined £1.96m for failures during the 2017 audit of Kier,  regarding audit scrutiny of long-term contacts. This was also reduced from £3.35m.

Hook, who retired from PwC a year ago, was fined a total of £135,000 for failures. and received a severe reprimand.

In Kier’s case, PwC has also been required to evaluate and report to the FRC on certain audits conducted in 2022-2023 which feature long-term contacts and the impact of remedial actions put in place.

Claudia Mortimore, FRC deputy executive counsel said: “Rigorous auditing of long-term contract accounting is particularly important in the audit of construction companies, where many contracts are spread over a number of years.

“Auditors must not only ensure that they obtain sufficient appropriate audit evidence to support the accounting of the contracts, but also apply sufficient professional scepticism.

“This is vital so that investors can have confidence in the financial statements.”

She added: “The respondents have accepted that there were deficiencies in the work performed on long-term contracts.

“In the intervening years, PwC has introduced a number of initiatives aimed at improving the quality of audit work in this area.

“In addition to the financial sanctions, the non-financial sanctions require PwC to review long-term contract audit work in subsequent audit engagements and to report to the FRC as to the efficacy of the initiatives it has introduced.”

The FRC said it did not assert that the breaches were intentional, dishonest or reckless.

It added that PwC and Hook provided a good level of cooperation with the investigation. The early stage at which admissions were made has also been reflected in the discount applied to the financial sanctions.

 

Latest news

Subcontractors told to stop work on Brymor sites

£80m revenue southern contractor files letter of intent to enter administration
18 hours ago

House builder Chartway sold to private equity firm

Cabot Square Capital signs another major construction deal
14 hours ago

Murphy Group appoints new chairman

Capita chairman and investment banker John Cresswell to start in November
18 hours ago

Tolent seals £40m Newcastle ‘future-living’ housing job

135-home Vaux scheme will be first of four neighbourhoods totalling 1,000 homes
19 hours ago

Cruden takes first job at £1.3bn Edinburgh Waterfront scheme

Preferred bidder named for first 750 net zero homes at new Granton Waterfront coastal town
19 hours ago

Trio of student towers to be built at Brent Cross Town

Ground works under way with main contractor due to be appointed next month
19 hours ago

Keltbray gets start date for £50m motorway upgrade

Contractor hails "significant step forward" for highways business
2 days ago

Site workers settle for 5% pay increase

Contractors and unions agree one-year deal following months of talks
3 days ago

Rising wages and skills gap to overshadow materials issues

Materials and product Inflation tops 20% so far this year, but labour set to be next big headache
2 days ago

Erith pays £2.8m bonus to staff after ownership switch

Around 450 staff have on average received over £6,000 since move to employee ownership five years ago
2 days ago

Algeco lands £19.2m Leeds modular school scheme

Offsite specialist will supply and install 192 steel frame modules
2 days ago

Eight firms placed on £750m Midlands and Eastern framework

Next generation framework for jobs up to £7.5m employs a parallel plotting structure
2 days ago

Aston Villa unveil plans for £100m stadium expansion

Construction set to start next year on first phase of Villa Park upgrade
2 days ago

Skanska bans ‘swing-up’ lorry loaders after site death

Banned vehicles are used mainly to deliver bulky items like cabins and welfare units
3 days ago

HS2 agrees £78m variation on Euston tunnels cost

Skanska Costain Strabag seals extra payment for agreed changes to the scope of work
3 days ago

B&K breaks ground at £150m Newcastle HMRC job

Work gets underway on city's largest ever office project
3 days ago

New building safety laws come into force today

Leaseholders protected and new regulator for construction product manufacturers in wake of Grenfell
3 days ago

Peel submits plan for £150m cannabis production plant

Isle of Man seeks to become a leader in the emerging medicinal cannabis sector.
3 days ago

Tarmac buys first electric concrete mixer truck

Country's first battery powered mixer truck will start site deliveries this Autumn
3 days ago

Tilbury Douglas wins Dorset hospital upgrade

Construction could start in 2024 after Dorset County Hospital secures £77.3m of funding
4 days ago

McGee in £2.4m provision for bid-rigging probe

Demolition contractor says provision will cover the expected fine over cover pricing ring
4 days ago

First designs for £275m HS2 Midlands nerve centre

Contractor due to be named in Autumn next year for Washwood Heath hub
4 days ago

London Bankside Yards next project switches from resi to offices

Revised plan submitted for 18-storey office next to Blackfriars Bridge
4 days ago

Plans in for Cambridge North major mixed-use scheme

Over 400 homes and nearly 600,000 sq ft of office and shops planned for railway sidings site
4 days ago

Barratt falls foul of planners on £25m estate

Council acts after residents complain about construction deliveries
4 days ago

VolkerHighways and WJ Group shot blast roads with steel

Latest retexturing technique provides benefits all round
4 days ago

Ten demolition firms named in cartel probe

Biggest names in demolition face massive fines over "unacceptable" behaviour on 19 contracts worth over £150m
1 week ago

Imtech vows to avoid big resi jobs after return to profit

Engineering services arm puts trio of loss-making residential jobs behind it
7 days ago

Sisk replaces Morgan Sindall on £1bn Midlands Highways Alliance

Four firms secure places in Midlands framework renewal race
1 week ago

Winvic wins Bristol Redcliff Quarter 468 flats job

Grainger buys planned build to rent project and brings in Winvic to start this Autumn
7 days ago

Contractor services