PwC is facing an investigation by an accountancy watchdog into its auditing of professional services firm RSM Tenon.
The Accountancy and Actuarial Discipline Board has been looking into PwC's work for Tenon and is expected to open a full inquiry within weeks, according to The Times.
Tenon's new management called in lawyers to review PwC's auditing of the group amid "serious concerns" about its work, company documents revealed. The lawyers, from Reynolds Porter Chamberlain, advised that Tenon may have a legal claim against the auditors.
The move follows a series of problems for the professional services firm, following a shock profit warning issued in January - the company also said at the time that its last full-year accounts would have to be restated.
In February, Tenon revealed it had sunk to an £84m first-half loss after taking a £61m writedown on goodwill. It admitted to "significant errors" in its last full-year financial statements, including in the way it accounted for employee bonuses and revenues from some contracts.
RSM has also seen a number of senior management moves over the last couple of months, with chief executive Andy Raynor and chairman Bob Morton leaving in January. Chris Merry has since taken on the role of CEO.
PwC hit back at its client, claiming in a letter to Tenon's audit committee that it had been misled "through both omission and deliberate misrepresentation".
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