FRC to investigate own member over Connaught leak

The FRC has launched an internal investigation after a member leaked information about the regulator’s investigation into PwC’s audit of Connaught to the press, reports Calum Fuller

Its investigation of PwC’s work on Connaught ultimately took five years. Connaught, a social housing provider, and its subsidiaries collapsed into administration in 2010, with the loss of more than 1,000 jobs. The FRC’s formal complaint against PwC alleged that the conduct of the firm and now retired partner Stephen Harrison ‘fell significantly short of the standards reasonably to be expected of a member firm and a member’.

Its judgment was supposed to remain confidential until a public hearing to be held last Thursday, 16 March, with the potential of sanctions being meted out.

But it has been reported an FRC member disclosed the verdict to a national newspaper.

In a statement, the FRC said: ‘We take breaches of confidentiality seriously and will investigate the matter thoroughly.’

For its part, PwC said: ‘We are concerned by the breach of confidentiality and welcome the tribunal's request for an investigation. We are confident that the FRC will conduct a thorough investigation and wait to hear the outcome.’

A separate hearing which concluded in July 2016 saw former Connaught finance director Stephen Hill given a five-year exclusion and former deputy financial director David Wells a three-year ban, after the FRC found the pair, who are both ICAEW members, failed to account correctly for a £4m short-term loan in the company’s 2010 interim financial statements.

Hill admitted that his conduct was sufficiently reckless to have amounted to acting with a lack of integrity. As well as the five-year exclusion, he agreed to pay £133,397 towards the executive counsel’s costs.

Wells admitted that he failed to act in accordance with the ICAEW’s fundamental principles of objectivity and ‘professional competence and due care’, and agreed to pay £125,198 in costs as well as a three year exclusion.

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