EY and PwC Facing Bad Times Due to London Capital & Finance Audits
The mega-companies like PwC and EY are facing bad times. The companies have to deal with troubles with their London Capital and Finance office. They are right now face-to-face with the Financial Reporting Council or FRC interrogation. The reputation of these two audit firms is at stake. The London mini-bond specialist-auditing firm crumbled last year due to its high-risk products. FRC has put on this order on the London audit firm of both EY and PwC. PwC audit firm’s auditing reports from 30 April 2016 to 30 April 2017 is under scanning.
The investigation is on the way
According to the FRC update and today finance news, these two firms will go through the investigation. The enforcement division will make sure to follow all the ethical procedures to find out the truth and facts. Pieces of evidence claim that the London Capital & Finance is a mini-bond investment firm. They unethically sold mini-bonds of high risks. According to the administration, the firm had eleven thousand and six hundred savers who lost around two hundred and thirty-seven million pounds in January 2019.
The collapse was the reason behind attracting too many eyes within a short period. The FCA or Financial Conduct Authority noticed such a crash and became curious enough to investigate. This was back in December 2018. The firm, at that time, decided to retreat all the materials and products related to the promotions of the mini-bonds. This happened, especially after people started commenting regarding the marketing being absolutely misleading, unclear, and very unfair.
Answer to Treasury Committee
There were many queries put forward by the Treasury select committee. According to the committee, there are doubtful points of FCA’s dealing with the collapse. They charged the FCA of regulating the promotional materials. Although the committee was not able to charge FCA of regulating the mini-bonds, the question remains.
EY in Trouble
EY, on the other hand, is facing charges on collaborating with Thomas Cook. Thomas Cook is a travel operator on an international basis, which collapsed in 2019. EY was also involved with NMC and the hospital crashed last year too. NMC had a hidden debt of 2.7 billion dollars. There has been a connection of EY with Wirecard, a German company with a massive scandal on the financial term.
As of now, both EY and PwC are under scrutinization and both of them are answerable to the FRC.