Companies often hire audit insurance companies in order to ensure that their audits are factually correct and accurate, getting an outside perspective on their spending and finances. Ensuring that an audit is accurate is a very important step for any company.
Which is why the statement from the auditing company Price water house Coopers (PwC), who handles the audition of the English rugby club Wasps, turned some heads, as information from the company’s accounts reveal that the auditors had given ‘falsified evidence’ while they were handling the audit for the year of 2017.
In response to the revelations, PwC have stepped down from their position as auditor for the sports club, and will be replaced by Mazars, which was elaborated in a noticed sent up to the London Stock Exchange.
The Premiership Club, formerly known as the London Wasps until their relocation to Coventry, says that the falsification of evidence was an isolated incident and that they had put in security measures and safeguards, even consulting with other audit insurance companies, to ensure the veracity of their financial procedures in the future. The club said in a statement that the incident does not conform with their policy of operating under the highest standards of governance.
The issue is reportedly about the misclassification of a £1.1 million cash transfer to the club from Mr. Richardson, which was marked as income, resulting in overstating the club’s earnings for 2017 by at least 50%. As a result of the erroneously stated earnings, Wasps Finance, a company related to the rugby club, was discovered to have breached loan covenants that were part of the £35 million worth of bonds that was issued to it back in 2015.
The bondholders responded by providing a waiver regarding the breach back in January, and edited the covenant so that shareholder contributions would be counted. The owner of the Wasps Mr. Richardson, who also owned one of many audit insurance companies in the UK, directly addressed the issue in his accounts made on the first week of May.
He says the breach was discovered during the audit enquiries, and as a result of said breach, the board had decided to run a comprehensive review of their financial processes.