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Auditors PwC and Saffery Champness under FRC investigation

Accounting watchdog the Financial Reporting Council (FRC) has announced it’s launched two investigations into the auditing of accountancy firms PwC and Saffery Champness.

The FRC investigation of Saffery Champness is in relation to its audit of the financial statements of Greensill Capital in 2019, while it’s securitising PwC for its audit of Wyelands Bank in 2018/19. Wyelands Bank is majority owned by Sanjeev Gupta’s GFG Alliance, which was one of Greensill’s biggest borrowers.

Greensill, which was at one time one of the world’s biggest providers of supply-chain finance, fell into administration in March after losing the backing of its insurers. According to the BBC, following this collapse the GFG Alliance lost more than £1bn.

The collapse of Greensill also led to a host of parliamentary and regulatory investigations into supply chain finance and its use of emergency Covid loans, as well as a parliamentary lobbying scandal. As reported in media outlets including the Guardian and the BBC, the scandal occurred after it emerged ex-prime minister David Cameron - who was employed by Greensill as an adviser - had asked officials to give Greensill access to emergency Covid loans in 2020.

Towards the end of March 2021, and as reported on the BBC and the Guardian, Cameron was cleared of any potential breach of lobbying rules by watchdog the Advisory Committee on Business Appointments.

The FRC’s decision to launch investigations came at a meeting of its Conduct Committee on 15 June 2021, with both being conducted by the FRC’s Enforcement Division under the Audit Enforcement Procedure.

A spokesperson from Saffery Champness has told Credit Strategy: “As professional accountants we owe a duty of confidentiality to present and former clients and, with this matter the subject of investigation, it would not be appropriate to comment at this time. Saffery Champness will of course be cooperating fully with the FRC.

“Audit quality is an absolute priority for Saffery Champness and we are committed to upholding the high professional standards our clients rightly expect.”

PwC, meanwhile, has told Credit Strategy: “It’s understandable that there is regulatory scrutiny in situations like this. We will cooperate fully with the FRC in its enquiries.

“We share the FRC’s commitment to audit quality and are two years into a wide-ranging programme to enhance audit quality across the firm.”

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