PwC has been ordered by a US court to pay damages of $625.3m (£474.6m) over the audit of a collapsed bank. According to the Wall Street Journal, the sum is one of the largest ever paid by an audit firm to settle a case.
The damages follow a ruling in December that PwC failed to detect a huge fraud at a client of Alabama Colonial Bank. Disclosure of the crime helped bring about the collapse of the bank.
The case was brought by the Federal Deposit Insurance Corp, the government agency that insures bank deposits in the US.
Alabama Colonial collapsed when it emerged that mortgage company Taylor, Bean & Whitaker, one of the biggest mortgage providers in the US, had been selling mortgages to the bank that had already been sold to other investors.
Judge Barbara Rothstein ruled that PwC had violated auditing rules by failing to design its audits to detect fraud.
PwC argues that not all the mortgages should have been included in consideration of the case and that several employees of Alabama Colonial interfered with PwC’s audit, a fact recognised in the ruling.