Two former Connaught directors and a partner at accountant PwC are facing an investigation into their conduct in the run-up to the social housing firm’s collapse in 2010.
Watchdogs at the Financial Reporting Council have delivered disciplinary Formal Complaints against the trio which are now being investigated.
The council has delivered complaints against:
- Stephen Harrison (PwC’s Senior Statutory Auditor and Audit Engagement Partner) and PwC in relation to the audit of the financial statements of Connaught plc and its subsidiaries for the year ended 31st August 2009.
- Stephen Hill (Connaught’s Group Financial Director) and David Wells (Deputy Financial Director responsible for the Group’s treasury management) in relation to the preparation and approval of Connaught’s interim financial statements for the six months ended 28th February 2010.
The first complaint alleges that Harrison and PwC failed to act with competence and due care in relation to the audit of the financial statements for the Group, Connaught Partnership Limited (“CPL”) and Connaught Compliance Limited (“CCL”), and that their conduct fell significantly short of the standards reasonably to be expected of a member or member firm of the Institute of Chartered Accountants in England and Wales.
The second complaint alleges that Hill and Wells breached the fundamental principle of integrity in relation to the accounting treatment of a short term loan provided by a related party shortly before the half year end, and that their conduct fell significantly short of the standards reasonably to be expected of members of the ICAEW.
Connaught collapsed in 2010 owing creditors more than £200m