PricewaterhouseCoopers investigated over Cattles audit

by Gill Montia

Story link: PricewaterhouseCoopers investigated over Cattles audit

PricewaterhouseCoopers (PwC) is being investigated by the Accountancy and Actuarial Discipline Board (AADB) over its audit of sub-prime personal loan specialist, Cattles.

Earlier this year, Cattles admitted to a breakdown in internal controls that had resulted in the incorrect application of impairment policies at its Welcome Financial unit.

In April, the firm warned that it needed to make a provision of £850 million to cover bad debts; the estimate comprised £700 million relating to past years, plus £150 million for potential future losses.

The lender had already issued two profit warnings, suspended six directors and announced that it planned to restate its 2007 figures, after reporting a 25% rise in pre-tax profit for the year.

A review completed by Freshfields and Deloitte this month resulted in the dismissal of the six suspended directors.

According to reports, the AADB will investigate the preparation, approval and audit by PwC of the financial statements of Cattles and its Welcome Finance business for the year ended December 31st 2007.

It will also consider interim financial statements for the first half of 2008.