Watch­dog blasted for ‘in­ad­e­quate’ PwC fine

Daily Mail - - City & Finance -

THE £10m fine slapped on ac­count­ing gi­ant PwC has been branded ‘to­tally in­ad­e­quate’ as pres­sure mounts on reg­u­la­tors to get tough on fail­ing au­di­tors.

Big Four accountant PwC has been hit with the fine by the Fi­nan­cial Re­port­ing Coun­cil af­ter it signed off BHS as a go­ing con­cern in 2015 – just days be­fore it was sold by retail ty­coon Sir Philip Green to se­rial bank­rupt Do­minic Chap­pell for £1.

They ap­proved the ac­counts at the High Street re­tailer de­spite know­ing the sale would cut it off from cru­cial sup­port from Taveta. BHS col­lapsed about a year later with the loss of 11,000 jobs and leav­ing a mas­sive black hole in the pen­sion fund.

PwC’s fine was re­duced to £6.5m be­cause of its co-op­er­a­tion with the in­quiry. Steve Deni­son, the part­ner who over­saw the BHS au­dit, was fined £500,000 – later re­duced to £325,000 – and banned from do­ing sim­i­lar work for 15 years.

Since April last year the FRC has dished out fines of more than £30m to au­di­tors over botched work. PwC ac­counts for more than two-thirds of the penal­ties, hav­ing been fined £5m for its work on Con­naught and £5.1m for its au­dit of RSM Tenon.

Ri­val KPMG was this month fined £4.5m for its fail­ures over scan­dal-hit Quin­dell.

But crit­ics said the fines were tiny com­pared to au­di­tors’ and part­ners’ earn­ings.

Frank Field MP, chair­man of the work and pen­sions com­mit­tee, said: ‘The fine of £10m for one year’s au­dit of one com­pany ac­counts for a full third of all the fi­nan­cial penal­ties im­posed by the FRC over the last year. Wel­come as this ap­par­ent step change is, it is still to­tally in­ad­e­quate given the hor­ror show at BHS.’

MPs have now writ­ten to the FRC to ask whether it will launch a wider in­ves­ti­ga­tion into PwC’s work on BHS par­ent com­pany Taveta – adding that they may want to see the fines in­creased.

For­mer BHS boss Chap­pell is un­der­stood to be con­sid­er­ing le­gal ac­tion over PwC’s dis­cred­ited au­dit of the re­tailer. It is thought his ar­gu­ment cen­tres on his use of the ac­counts that were rub­ber-stamped by PwC as the ba­sis for his ac­qui­si­tion.

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