UK - PricewaterhouseCoopers has been forced to undertake an exhaustive review of its client base after the Financial Reporting Council discovered it was acting as auditor to a company while providing actuarial services to its defined benefit pension scheme.
Under the FRC's strict Ethical Standards, auditors are warned performing both services gives rise to an "unacceptable self review threat" - when a firm effectively reviews work done by themselves or their colleagues.
The watchdog found that, on one listed audit, PwC was also the actuary to the group's DB scheme and performed the actuarial valuation of the scheme. An independent actuary then determined the key assumptions and updated PwC's valuation in arriving at a value for inclusion in the group accounts.
The report said: "These arrangements were not consistent with the underlying principles of the Ethical Standards, due to the independent actuary's reliance on PwC's valuation leading to an unacceptable level of self review threat.
"At our request, the firm is undertaking an exercise to identify whether there are any other listed audit clients where PwC also acts as actuary to the client's pension scheme. We will follow up the results of this exercise in next year's inspection."
The revelations followed an FRC review of the practices of the ‘big four' accountancy firms: PwC; Deloitte; Ernst & Young; and KPMG.
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