PwC fined 4.5 million pounds for unsatisfactory audit of Sanjeev Gupta’s Wyelands Bank in 2019

The unsatisfactory audit of Sanjeev Gupta’s Wyelands Bank in 2019 has resulted in consultancy firm PwC receiving a massive fine from the Financial Reporting Council.

One of the worlds’ largest consultancy firms has been fined 4.5 million pounds ($9.2 million AUD) for “serious failings” in auditing of the final statements of billionaire Sanjeev Gupta’s Wyelands Bank in 2019.

PwC was appointed as the statutory audit firm for Wyelands Bank between 2015 and 2019, and was sanctioned 4.5 million pounds by the Financial Reporting Council (FRC) on Tuesday.

However, the fine has been reduced to 2.89 million pounds ($5.9 million AUD) for co-operation and admissions by PwC, although the firm was still severely reprimanded and issued with an order requiring it to take specified action designed to prevent the recurrence of the contravention.

Sanjeev Gupta, executive chairman of the GFG Alliance. (AAP Image/David Moir)

Auditor, Jonathan Hinchliffe has been fined 55,000 ($112,000 AUD) pounds which was discounted to 33,410 ($68,500 AUD) for his co-operation and admissions.

The FRC said the lending activities of Wyelands Bank were largely funded by deposits from retail customers, and at the 2019 year-end it held 727 million pounds ($1.4bn AUD) in customer deposits from more than 15,000 UK public savers.

PwC and Mr Hinchliffe admitted breaches in relation to six areas of the 2019 audit, which included the failure of the audit team to properly understand the bank’s lending, and adequately consider the risks posed by its potential exposure to related parties in the GFG Alliance.

Deputy executive counsel for the FRC, Claudia Mortimore said it was important for auditors to have a “full understanding” of the audited entity and its business.

“This is particularly important where there has been a change of ownership and change in the nature and scale of activities.,” she said.

PwC was appointed as the statutory audit firm for Wyelands Bank between 2015 and 2019, and was sanctioned 4.5 million pounds by the Financial Reporting Council on Tuesday. Picture: NCA NewsWire / Nikki Short

“In this audit, the risks around the bank’s membership of and involvement with the GFG Alliance were not properly recognised and considered, despite clear warnings to the bank from the PRA.

“This led to a number of serious failings, which had the potential to adversely affect retail depositors.”

Wyelands Bank was founded in 1980, and was acquired by a new beneficial owner in 2016, which resulted in the Gupta Family Group Alliance (GFG) taking ownership.

Mr Gupta’s GFG Alliance were outed from the Whyalla steelworks in February this year, after Prime Minister Anthony Albanese announced a $2bn rescue package, also placing the steelworks into administration.

The GFG Alliance is an unconsolidated group of companies under common ownership, operating in a number of industries including steel, aluminium and renewable energy.