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Watchdog expands investigation into Babcock audits

The Monetary Reporting Council has expanded its investigation into the auditing of Babcock Worldwide’s account by PWC.

The accounting watchdog will now look at PWC’s work auditing Babcock’s 2019 and 2020 accounts. It was already investigating its work on the 2017 and 2018 accounts. The earlier investigation was opened following an ordinary audit high quality overview carried out by the FRC.

A spokesperson for PWC stated the corporate was totally cooperating with the FRC: “Audit high quality is of paramount significance and we stay dedicated to our ongoing programme to boost audit high quality and to the supply of constantly high-quality audits. The FRC’s annual critiques of our audit work, insurance policies and procedures present a continued development of enchancment in our work and we use their insights, along with our personal critiques, to repeatedly enhance how we ship high-quality audits,” they added.

In December, Babcock introduced it must restate its outcomes for the half-year to 30 September 2020 after it reviewed the profitability of its contracts and the carrying worth of its property. The changes totalled £855m.

The FRC’s newest auditing overview comes the week after its hearing into KPMG’s auditing of Carillion began. KPMG chief government Jon Holt stated it was “clear” that the regulator had been misled in its dealings with KPMG.

Babcock Worldwide has historically labored within the rail and vitality contracting markets. Earlier this month, it agreed to sell its overhead powerlines business to M Group Providers for round £50m. Babcock’s rail outfit has undergone important restructuring lately, which contributed to a £6.3m loss for the division in its final set of accounts.

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