Sanjeev Gupta's Bank Audit Failure: PwC Fined £2.9m

PwC has been fined £2.9m by the Financial Reporting Council (FRC) for its failure to properly audit Wyelands Bank, owned by Sanjeev Gupta's Gupta Family Group Alliance (GFG Alliance), with the audit team failing to understand the bank's lending and risks related to its exposure to GFG Alliance.

The FRC found breaches in six areas of the FY2019 audit, including the failure to examine concerns raised by the Prudential Regulation Authority (PRA) and inadequate consideration of related party risks. The audit team did not exercise sufficient professional skepticism, which led to a lack of understanding of the bank's business and its relationship with GFG Alliance. This failure had significant consequences, as the bank was later ordered to repay deposits in 2021 due to financial concerns.

PwC acknowledged the breaches and apologized, stating that they have taken steps to enhance audit quality since 2019. The firm's partner, Jonathan Hinchliffe, was also fined £33,400 for his role in the failed audit. The FRC emphasized the importance of auditors having a full understanding of the audited entity and its business, particularly in cases of significant changes. This is not the first time PwC has been fined for audit failures, as they were also fined £2.9m by the UK's Financial Conduct Authority (FCA) for audit failures at Greensill Capital, a bank previously linked to Sanjeev Gupta's GFG Alliance.

The fines imposed on PwC serve as a reminder of the importance of audit quality and the need for auditors to exercise professional skepticism. The firm's failure to properly audit Wyelands Bank and Greensill Capital has significant implications for the accounting industry and highlights the need for greater transparency and accountability. PwC has taken steps to address these issues, but the fines demonstrate that more needs to be done to ensure that auditors are meeting the required standards.