The Accountancy and Actuarial Discipline Board (AADB) has announced that it will investigating PricewaterhouseCoopers LLP and its staff in relation to its role as auditor to struggling sub-prime lender Cattles Plc.
As previously reported on Manifest-I, Cattles has sacked six directors since March, when it discovered a £700m accounting discrepancy at its Welcome Financial Services arm relating to the way bad debts were recorded.
The AADB said it would be looking into:
- the preparation, approval and audit of the financial statements of the Yorkshire-based Cattles Plc and Welcome Financial Services Ltd for the year ended December 31, 2007;
- the preparation, approval and review of the interim financial statements of Cattles Plc for the six months to June 30, 2008; and
- public statements covering the financial position and performance of Cattles plc and/or Welcome Financial Services Ltd between February 28, 2008 and February 20, 2009.
It said the decision was taken following consultation with the Institute of Chartered Accountants of England and Wales (ICAEW) and with the Institute of Chartered Accountants of Scotland (ICAS).
In a statement PricewaterhouseCoopers said: ‘We will fully cooperate with the AADB investigation and will vigorously defend our work,’
The AADB is the independent, investigative and disciplinary body for accountants and actuaries in the UK and is part of the Financial Reporting Council, the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance.
How the Cattles’ Story has unfolded
23 July: The Accountancy and Actuarial Discipline Board announces investigation of role of Cattles’external auditor PricewaterhouseCoopers.
5 July: Cattles announces departure of group FD James Corr and the FD of Welcome, plus four other executives.
23 April: Cattles’ shares are suspended after annual report delay pending independent review by Deloitte.
01 April: Cattles sets aside an additional £850m for bad debts; believes a ‘breakdown in internal controls’ at its Welcome Financial Services arm led to under-provisioning for bad debtors.
10 March: Three executives are suspended, including group finance director James Corr. Appointment of Corr’s replacement delayed.
4 March: Cattles suspends three directors, including the FD of the Welcome.
25 February: Cattles’ FD, Corr, says he will stay on beyond his proposed February retirement date until a review of the business’ impairment provisions is completed.
24 February 2009: Cattles announces profts warning, says figures will be `substantially lower than current market expectations.’ Negative market reaction hits share price.