Probe into PwC's handling of Intu Properties accounts closed

Accounting watchdog the Financial Reporting Council has closed an investigation into PwC over its auditing of failed shopping centre business Intu Properties.

The big four firm was being probed by the FRC for its work on two years of accounts for the retail property and leisure giant, prior to its collapse in June 2020. Launched in January this year, the investigation centred on Intu's accounts in 2017 and 2018 - including a period in which the firm reported debts of £4.8bn.

Now, 11 months later, the case has been dropped with the FRC saying it had decided that PwC is no longer liable for enforcement action. The move has been welcomed by PwC which was fined £7.5m in March for its handling of Babcock International Group's accounts in the same years as the Intu reports, and in June handed a £3.5m fine for its auditing of Eddie Stobart Logistics in 2018.

Intu, which owned some of the UK's largest shopping centres including Gateshead's Metrocentre, Manchester's Trafford Centre and Dudley's Merryhill, had suffered debt problems which led it to request a standstill period with its lenders that would give it breathing space. After intense negotiations the firm, which had employed around 3,000 people, called in administrators in June 2020 having breached debt covenants.

Evidence of its difficulties had appeared in the 2018 accounts under investigation where the extent of debts was laid clear and the following year losses of £2bn were reported with boss Matthew Roberts talking of "material uncertainty in relation to Intu's ability to continue as a going concern".

A notice from the FRC said: "The Financial Reporting Council today announces the closure of its investigation in relation to the audits conducted by PricewaterhouseCoopers LLP of the consolidated financial statements of Intu Properties plc for the years ended December 31, 2017 and December 31, 2018.

"The investigation was opened, under the Audit Enforcement Procedure, following a decision by the FRC’s Conduct Committee, on January 24 2023. In accordance with Rule 146 of the AEP, the FRC’s Executive Counsel has decided in the circumstances of this case that the relevant person(s) should no longer be liable for enforcement action. Accordingly, the case has been closed."

A statement from PwC said: "We are pleased the investigation has closed without sanction. We remain committed to delivering high quality audits."

In October, the FRC launched a consultation in a bid to tighten up auditor requirements to detect and report material misstatements.