Accounting giant PwC has been hit with a £4.5million fine for ‘serious failings’ in its audit of a bank owned by steel tycoon Sanjeev Gupta.
The industry regulator said the Big Four firm breached requirements in six areas when it scrutinised Wyelands Bank’s 2019 accounts.
The now-defunct bank was founded in 1980 before being acquired by metals magnate Gupta in 2016 and brought into his GFG Alliance group of firms.
An investigation later revealed that the lender had pumped too much depositors’ money into the Indian-born industrialist’s other businesses.
Wyelands was then ordered to return the cash to savers in an unprecedented move by the Bank of England and the company was wound up.
Gupta was once dubbed the ‘saviour of UK steel’ but has since become mired in scandal.
Probe: Wyelands Bank was founded in 1980 before being bought by metals magnate Sanjeev Gupta (pictured)
Authorities are probing GFG Alliance in a long-running fraud and money laundering investigation.
Financing company Greensill, which at one point employed former Prime Minister David Cameron as an adviser, had provided billions of pounds of financing to the group before it collapsed in 2021.
The Financial Reporting Council (FRC)yesterday fined PwC, which had been responsible for auditing the bank’s accounts.
The watchdog said the audit team did not understand the bank’s lending or ‘adequately consider’ the risks posed by its exposure to GFG Alliance companies.
Jonathan Hinchliffe, who led the audit, was fined £55,000, which was reduced to £33,412 for ‘exceptional cooperation’. PwC’s fine was cut from £4.5million to £2.9million to reflect the company’s cooperation with investigators.
Breaches included failing to carry out adequate risk assessments and audits of related party transactions.
FRC deputy executive counsel Claudia Mortimore said: ‘The audit breaches in this case highlight the importance or auditors to have a full understanding of the audited entity and its business.
‘This is particularly important where there has been a change of ownership and change in the nature and scale of activities.
‘In this audit, the risks around the Bank’s membership of and involvement with the GFG Alliance were not properly recognised and considered, despite clear warnings to the bank from the PRA.
‘This led to a number of serious failings, which had the potential to adversely affect retail depositors.’
It comes after former Wyelands chief executive Mark Hunter was last year fined nearly £120,000 by the Prudential Regulation Authority (PRA).
A spokeswoman for PwC said: ‘We acknowledge and apologies that aspects of this piece of work fell short of the required standards.
‘Since 2019, we have undertaken a multi-year programme to enhance audit quality and have as a result seen significant changes to our audit practice.
‘Recent supervision reports reflect the improvement and investment made in audit quality which remains our top priority.’
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