Three firms involved in the audits of collapsed investment company London Capital & Finance (LCF) have been fined £9,518,250 for serious audit failures
PwC, EY and Oliver Clive & Co Ltd (OCC) were all involved with various audits of LCC over a three-year period from 2015 to 2017
During this time, the Financial Reporting Council (FRC) said all three firms failed to show professional scepticism, identify the risk of material misstatement or assess the company’s viability as a going concern. There were multiple breaches of audit rules and extensive misconduct by all the auditors.
LCF went into administration on 30 January 2019, owing £237m to 11,625 individual bondholders when its business collapsed. The company’s model was based on issuing private bonds to retail investors and lending the proceeds to financial clients. In December 2018, the Financial Conduct Authority (FCA) imposed restrictions on LCF’s ability to issue or approve further financial promotions, after the financial regulator warned of serious concerns about LCF’s conduct.
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