PwC fined £1.4m over JP Morgan breach
The Accountacy and Acturial Disciplinary Board (AADB) issued its verdict after it found PwC had passed false information to the Financial Services Authority (FSA) on JPMSL's compliance with the regulator's client money rules. The case focused on PwC's relationship with JPMSL between 31 December 2002 and 31 December 2008.
The AADB said: "PwC accepted that it did not carry out its professional work in relation to these reports with due skill, care and diligence and with proper regard for the applicable technical and professional standards expected of it."
The FSA client money rules stipulate that any company that handles client's money must ensure the money is kept in segregated accounts and is audited separately. In this case, PwC did not "obtain sufficient appropriate evidence...and failed to identify and consequently did not report that JPMSL had not at all times held client money separate from the firm's money".
A PwC spokesman was reported to say that the firm "regretted" that one aspect of its work "fell beneath our usual standards".
However the AADB is currently investigating two other cases where client money rules have been allegedly breached, one again involving PwC. This time the client is Barclays Capital Securities and involves PwC's role during the period 1 December 2001 to 29 December 2009.
The second case involves another of the big 4 accountancy firms, Ernst and Young (E&Y) and its client Lehmann Bros for its role in the year ending 30 November 2007.