Lib Dems blast PwC's Northern Rock audit

From the Financial Director Website article by David Jeduah


Lib Dems' shadow chancellor Vince Cable and Treasury spokesman Lord Oakeshott urge ministers to ‘go after’ PwC, and even suggest that the firm should step down as auditors

The Lib Dems have turned up the heat on PwC, making calls for MPs to haul the firm over the coals for its audit of Northern Rock.

The party’s shadow chancellor Vince Cable and Treasury spokesman Lord Oakeshott criticised the firm, urging ministers to ‘go after’ PwC, and even suggested that the firm should step down as auditors.

Cable pushed for ministers to ‘go after the auditors who failed to spot glaring problems and mounting bad debt,’ on the day Northern Rock released its half-year numbers.

But, in the interim report, the firm has taken a tougher stance with its client.

It warned that there was a ‘material uncertainty’ Northern Rock could continue as a going concern because the bank still needs to secure European Commission approval on its government loans.

Cable added that the government should now ‘go after the former directors who have managed to shift the bank’s losses on to the taxpayer.’

In communications with the City, Northern Rock’s chairman Ron Sandler said former FD Dave Jones was no longer a main board member but is still an employee of the bank.

A Northern Rock spokesperson said: ‘PricewaterhouseCoopers were re-appointed as Northern Rock auditors in May 2008 and as far as we are concerned there is nothing further to say.’

PwC refused to comment citing client confidentiality.

Michael Fallon, a member of the Treasury committee backed the call for PwC to drop its auditor role. ‘I think [PwC] are conflicted,’ he said, referring to the help the firm also gave the bank in selling on its loans.