PwC warned that HSBC CEO John Flint’s aim of “driving revenue at a faster pace than costs” could give managers an incentive to massage their numbers, according to a recent report by Bloomberg.
The bank’s auditor since 2015, PwC performed “ a number of incremental procedures which might indicate that revenues or costs were intentionally misstated,” it said in the bank’s latest annual report published in February this year.
The audit firm, according to the media report, said that Flint’s goal was vulnerable to misstatement because it was “highly sensitive to small changes.”
There was no evidence of any wrongdoings, according to the report who quoted an anonymous sources familiar with the matter as saying.
In a global leadership summit held in Hong Kong in March, the bank’s CEO rebuked top managers for missing both revenue targets.
However, this could been seen as a big four auditor—which is now under tighter scrutiny in the UK after several scandals and skepticism about their impartiality in the past few years—trying to be more cautious in their practice.
These heavyweights have been slammed for their dominance in UK’s audit market after high-profile corporate collapses in the past year.
The call for the big four breakup started in May 2018 when two parliamentary committees issue a scathing report which accused the big four of being “complicit” in the collapse of government contractor Carillion.
The Competition and Markets Authority (CMA) in the UK recommended last month an operational split between the big four’s audit and consulting businesses, which requires appointing different chief executives and boards for audit and consulting arms and separate financial statement.
The CMA also proposed joint audits by both large and smaller accounting firms, in addition to having corporate audit committees to be held accountable for their choices of auditors.
