PWC ‘should have raised alarm before BHS sale’

PWC should have raised the alarm over BHS’S ability to keep trading before the stricken retailer was sold to a serial bankrupt for £1, according to the accountancy watchdog.

The Financial Reporting Council (FRC) said an audit of BHS’S 2014 accounts before it was sold by Sir Philip Green had failed to collect evidence pointing to why it should be considered a going concern.

BHS collapsed into administration a year after the sale to Dominic Chappell, resulting in the loss of 11,000 jobs, causing public outcry over its failure and a raft of regulatory investigations.

In a damning report, the watchdog said the accounts were “incomplete, inaccurate and misleading”, and presented an optimistic picture of the retailer’s financial performance. The FRC’S report underpinned a decision to issue PWC with a record £6.5m fine for its accounting sign-off.

Steve Denison, the PWC partner in charge of the BHS audit, also faced a £325,000 penalty and was effectively handed a 15-year ban from the profession.

The FRC report said both PWC and Mr Denison had “failed to gather any audit evidence on which to conclude that the going concern assumption was appropriate”. It said: “Based on the audit evidence obtained, they should have concluded that a material uncertainty existed about BHS Group and BHS’S ability to continue as going concerns.”

A spokesman for PWC said the firm was “sorry that our work fell well below the professional standards expected of us and that we demand of ourselves”.