Financial Reporting Council opened a probe into the Barclay's auditor PwC at the end of 2011 following a £1.1m fine for Barclays (Photo: Reuters)
Financial Reporting Council opened a probe into the Barclay\'s auditor PwC at the end of 2011 following a £1.1m fine for Barclays (Photo: Reuters)

Britain's accounting regulator, the Financial Reporting Council, has dropped its investigation into PwC's preparation of compliance reports for Barclays Capital Securities.

The FRC said in a statement that there was no realistic prospect that an independent tribunal would back the regulator and therefore it has decided to drop the probe.

"Consequently, no further action will be taken and the case will be closed," added the FRC.

The accounting watchdog opened the investigation into Barclays' auditor in late 2011 after the bank was fined £1.1m (€1.3m, $1.8m) in the same year for failing to segregate customer money from 1 December 2001 to 29 December 2009.

PwC, one of the world's "Big Four" accounting firms, said it had cooperated fully with the FRC and was pleased the investigation was now closed.

The FRC is responsible for promoting high quality corporate governance and reporting to foster investment as well as monitoring and taking action against firms' corporate reporting and auditing.

It also operates independent disciplinary arrangements for accountants and actuaries and oversees the regulatory activities of the accountancy and actuarial professional bodies.

Other Enquiries

The FRC can start a disciplinary investigation in one of two ways.

It can either start a probe following professional bodies referring cases to the FRC or if the watchdog decides, of its own accord, to investigate a matter.

The Conduct Committee then considers each case identified or referred to it and decides whether or not the criteria for an investigation are met.

In November this year, the FRC revealed that it is "making enquiries" into the Co-operative Bank over its 2012 accounts with the potential for a full investigation.

It follows the bank's revelation that it has a £1.5bn capital hole on its balance sheet, a drugs and orgies scandal surrounding former chairman Reverend Paul Flowers, the resignation of Co-operative Group chairman Len Wardle who had appointed Flowers to his role, and ongoing poor financial performance which led to the "ethical" institution being taken over by hedge funds.

"We are making enquiries into the Co-op's financial reporting in accordance with our normal procedures and under the terms of the Accountancy Scheme if we commence a formal investigation we will announce that via a press announcement," said a statement from the FRC.

Ordinarily, the FRC does not announce its initial enquiries. However, on 4 November the Co-op had made comments in a prospectus revealing this fact.

"The Bank has received certain enquiries from the Conduct Committee of the Financial Reporting Council in respect of the 2012 accounts," said the document.

"These enquiries relate to the disclosure in the 2012 annual report and accounts of the Bank's regulatory capital position. They also relate to the Bank's loan impairment, impairment of its investment in its replacement banking IT platform, and to fair value disclosures."