Sanctions for both PwC and KPMG over Eddie Stobart audits

PwC has been fined just under £2m by the FRC and received a severe reprimand for its audit of Eddie Stobart plc for the financial year ended 30 November 2018. Audit engaged partner, Philip Storer was fined £51,000 and received a severe reprimand.

KPMG has also been fined for its earlier audit (for the financial year ended 30 November 2017) of the same company! KPMG was fined £877,500, with the Big 4 firm’s poor disciplinary record been noted as an aggravating factor.

Former KPMG partner Nicola Quayle was fined £45,000, and FRC said the notable aggravation factors were her seniority at the point of signing the audit report and past disciplinary record.

The FRC said there were numerous serious failures in relation to PwC’s audit work on ESL’s property transactions, including a failure to identify revenue recognition on those transactions as a significant risk of material misstatement; failing to carry out a formal consultation on the technical aspects of accounting for these transactions; a lack of challenge of management’s selection of accounting policy; and a lack of professional judgement in their work on the transactions.