BT under fire from own auditor
June 8, 2020
The external auditor of BT has issued an “adverse opinion” on the company’s internal financial reporting controls.
KPMG wrote that “BT did not maintain effective internal control over financial reporting as of March 31, 2020 (19-20 FY) because of . . . material weaknesses related to general IT controls and risk assessments”.
Rachel Canham, company secretary and general counsel for governance at BT, admitted “a reasonable possibility that a material mis-statement would not have been prevented or detected on a timely basis during the year ended March 31, 2020”.
BT suffered a major accounting scandal in its Italian business, which went on for about ten years before it was uncovered in 2016 and lead to a £530 million (€595m) write-off. Also, in 2018, Willis Towers Watson, a consultancy, miscalculated pension liabilities by £500 million, said BT.
BT had been seeking to address weaknesses in general IT controls and risk assessment, which it had identified in its previous financial year, but the “remediation activity had not fully been completed in the year”, Canham said.
KPMG, which conducted an investigation into BT Italia, replaced PWC as BT’s external auditor in 2018.
The accounting issues noted by KPMG are understood to be unrelated to the Italian problems and are thought to involve American accounting regulations.