Jul 28, 2017

PwC publicly rebuked over alleged Vodafone conflict

One of Britain's top investors dealt a stinging rebuke to PwC at Vodafone's annual meeting on Friday, accusing the accounting firm of failing to eliminate a conflict of interest. Standard Life, a top 25 shareholder in Vodafone, made its unusual public intervention after pressing PwC for months to eradicate the conflict, which arose after the accounting firm, which has audited Vodafone since 2014, began acting as an administrator to collapsed retailer Phones4U. Vodafone, O2 and EE have been accused by some creditors, including Phones4U founder John Caudwell, of colluding to pull their contracts from the retailer and triggering its September 2014 bankruptcy. Last year, PwC warned Vodafone's board that the company faced possible legal action from Phones4U. "The appointment of PwC as administrators to [Phones4u] after their appointment as auditors of Vodafone created a conflict, regardless of whether litigation against Vodafone is pursued," Deborah Gilshan, governance director at Standard Life, said at the meeting. PwC's appointment as Phones4U's administrator prompted Vodafone to seek advice from the UK accounting watchdog on the potential conflict. Vodafone's audit and risk committee has asked PwC to establish "Stringent safeguards" to ensure the team working on the telecom company's accounts are physically separated from the team working with Phones4U. The FTSE 100 company also asked PwC to ensure any potentially confidential material is stored separately, with highly restricted access.

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