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Higgins: FRC dropping Tesco probe not a sign of weakness

The Financial Reporting Council (FRC) may have called off its investigation into PwC’s audit of Tesco accounts, but as the regulator's investigation into the audit of BT illustrates, it should not be seen as a let-up of the its focus on the larger accountancy firms, says Jenny Higgins, senior associate at law firm Kingsley Napley 

PwC is under the FRC’s microscope yet again, this time in relation to its audits of the BT Group’s financial statements. In October last year, BT announced that an internal investigation in to its Italian business had identified 'historical accounting errors and areas of management judgement requiring reassessment'.  

It is understood that the overstatement of earnings took place over a number of years and will cost the group £530m. Now the FRC has launched an investigation in to whether PwC should have picked up on the accounting irregularities as part of it audits. While PwC has been auditing the BT Group since 1984, the FRC has announced that its investigation will be confined to the audits carried out between March 2015 and 2017.

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