Mario Christodoulou, Accountancy Age, Monday 4 October 2010 at 13:06:00

AADB launches investigation over compliance with FSA rules on client assets


The accounting watchdog has launched an investigation into PwC?s workauditing investment bank JPMorgan.

In a statement, the Accountancy and Actuarial Discipline Board (AADB) said itwas investigating PwC?s role in JPMorgan?s compliance with client asset rulesset by the Financial Services Authority (FSA).

The board said it was investigating: ?The conduct of PricewaterhouseCoopersLLP in relation to the preparation of reports to the FSA in respect of JP MorganSecurities Limited?s compliance with the FSA?s Client Asset Rules for theperiods ended 31st December 2001 to 31st December 2008.?

A PwC spokeswoman said: "We are fully cooperating with the AADB investigationand have no further comment to make at this stage".

The announcement comes a week after the FSA found ?material failings andweaknesses? in a number of audits, focusing on segregation of client money andassets within financial services firms.

TheAADB simultaneously announced it was investigating Ernst & Young (E&Y)over similar issues in its audit work at Lehman Brothers' European arm.This is the second AADB investigation in connection with Lehman Brothers. Thewatchdog is also looking at the treatment of so called Repo 105, or repurchasetransactions within the bank.

An E&Y spokeswoman said it was one of a number of auditors that had beenreferred to the AADB by the FSA "in relation to reporting on client assets".

"Ernst & Young can confirm that it has been approached by the AADB inrelation to this matter. We will cooperate fully with the investigation."