Jun 8, 2017

BT drops PwC following Italian accounts scandal

BT has replaced its auditor for the first time in 33 years after an accounting scandal at its Italian business cost it £530m. The former state-owned phone giant has dropped PwC and will replace them with rival accounting firm KPMG. In January, BT admitted its Italian business had overstated profits, leading to a share price slump. Now the firm will be able to get to grips with the accounts more fully once the 2017-18 results are audited by PwC for the final time. An subsequent investigation by KPMG found "Improper accounting practices and a complex set of improper sales, purchase, factoring and leasing transactions", which meant profits in the Italian business had been overstated for a number of years. Last month, BT revealed that, as a result of the scandal, chief executive Gavin Patterson's pay would be cut from £5.28m to £1.34m. Around 4,000 staff were also axed, although some of these cuts were announced before the scale of the scandal was known. PwC was criticised for missing an accounting scandal at Tesco in 2014 - where it had been auditor for more than 30 years.

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