The UK accounting regulator has extended its investigations into PwC’s audits of defence giant Babcock International.
The Financial Reporting Council (FRC) had already started a probe into audits which took place between March 2017 and March 2018 but said it will now investigate the accounts for the 2019 and 2020 financial years.
It said the decision to broaden the investigation was made by the FRC’s conduct committee in December 2021.
The move comes after Babcock, which operates the huge dockyards at Devonport in Plymouth and Rosyth in Scotland, announced a review into contract profitability and its balance sheet last year.
In April, the company said it would cut about 1,000 jobs and sell off parts of its business after revealing mammoth writedowns of £1.7bn.
In a statement, the FRC said: “The investigation will be conducted by the FRC’s enforcement division under the Audit Enforcement Procedure.
“The FRC has an ongoing investigation into aspects of the statutory audits by PwC of the consolidated financial statements of Babcock for the years ended March 31, 2017 and March 31, 2018.
“That investigation followed the outcome of an audit quality review.”
PwC said it will fully cooperate with the FRC’s inquiries and stressed the paramount importance of audit quality.
It added: “The FRC’s annual reviews of our audit work, policies and procedures show a continued trend of improvement in our work and we use their insights, together with our own reviews, to continuously improve how we deliver high quality audits.”
Babcock, which saw shares rise in early trading, declined to comment.
In April 2021, Babcock revealed it was parting ways with PwC and had appointed Deloitte as its new external auditor.
