PwC steps back from Wasps role over 'falsified' information

09 July 2018 2 min. read
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Big Four firm PwC has resigned as auditor for Wasps Holdings, a group best known for its ownership of Wasps Rugby. The firm said it did not believe continuing its relationship with the club was appropriate, after PwC testing found evidence provided for the auditing work had been “falsified” by another source.

Wasps Rugby Football Club is an English professional rugby union team, which plies its trade in the Aviva Premiership, England’s top rugby division. The club based in Coventry, England, sharing its stadium, the Ricoh Arena, with the local football team Coventry City. Wasps reported a successful 2017, both on and off the pitch, having finished first in the league, eventually losing in a playoff final to Exeter, while turnover increased 8.5% to £33.6 million, and operating losses fell from £6.2 million to £800,000.

However, despite such an apparently positive term, Wasps Holdings, which owns both the rugby team and the stadium, has found itself in a troubled state in recent months, relating to a £1.1 million over-statement of consolidated EBITDA. In a statement to the stock exchange in December 2017, Wasps said it was making a consent solicitation as a result of a reduction in consolidated EBITDA for the financial year ended 30 June 2017 from its original statement of £3.5 million to £2.4 million.

PwC steps back from Wasps role over 'falsified' information

At the time, Wasps attributed this to the improper accounting of income under IFRS of and certain accounting irregularities relating to a cash contribution received by Wasps Holdings from its ultimate shareholder, which was incorrectly accounted for as income under IFRS in respect of the financial year ended 30 June 2017. Wasps’ accounting for the year had been performed by PwC, and news that the pair had decided to mutually terminate their relationship was reported as early as May 2018.

However, a newly published document has confirmed that PwC’s resignation was less an admission of fault, and more a defense of its performance. In a letter published on Companies House, PwC claimed it had been "provided with evidence which our testing revealed to have been falsified", which suggests that the culpability for the apparent accounting error would reside elsewhere.

PwC further stated that "given the seriousness of these events… we do not consider it appropriate” to continue in its auditing role for Wasps Holdings. The group has since replaced the professional services giant with Mazars as its new auditor.

In response to the accounts, Wasps Holdings' directors stated that it was an "isolated instance" and "consider(s) that the measures put in place provide additional controls to prevent such an occurrence."