Britain’s corporate governance regulator has launched an investigation into PwC’s auditing of Redcentric, the UK firm that manages IT and cloud services for small businesses.

The Financial Reporting Council said it has started a probe under its “audit enforcement procedure” after Redcentric was forced to re-announce its financial results and carry out its own investigation into its accounting practices at the end of last year.

In November, Redcentric revealed “accounting misstatements“, that would lead to a delay in reporting its half-year accounts and added it would have to write down its historic profits.

The company hired Deloitte and Nabarro to carry out “independent forensic investigations” into the irregularities and also appointed a new chief finance officer. Shares suffered their worst one-day fall on November 7, collapsing more than 70 per cent.

The FRC’s investigation covers PwC’s auditing for the year ending in March 2016.

“The FRC’s investigation will consider, but not be restricted to, issues regarding misstated accounting balances”, said the regulator.

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