Pwc’s audit of BHS ‘was inaccurate and misleading’, says watchdog

A CLOSELY guarded report into the doomed audit of BHS has accused PWC of making “incomplete, inaccurate and misleading” statements about the retailer’s ability to keep going just before it was sold off for £1.

The Financial Reporting Council (FRC) has argued that the Big Four accountant “should have concluded that a material uncertainty existed” about the department store chain’s chances of survival after Sir Philip Green sold it in 2015, according to a leaked report into the audit seen by The Sunday Times.

The FRC declined to comment on the leak.

Details of the report emerged days after an influential group of MPS demanded to know when the unpublished document would be made public. There is still no date for publication, which Sir Philip has tried to stop from happening on the grounds that his business Taveta could be “adversely affected” by it.

The report is said to make eight allegations against PWC, including that it did not take into account the impact the sale of the business to Dominic Chappell would have even though its own tax team commented that the retailer was “effectively bust” at the time. BHS collapsed into administration a year after the sale, resulting in the loss of 11,000 jobs and a £571m pension black hole.

PWC has already been fined a record £10m by the FRC in relation to the audit, although this was later reduced to £6.5m after it agreed to settle early.

The main PWC partner on the BHS audit was also hit with a fine and banned from the industry for 15 years.

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”, and that “whilst the failings did not contribute to the collapse of BHS over one year later, they were serious”, which was reflected in the settlement.

Meanwhile, the pensions of 9,000 former BHS staff were secured yesterday after the Pension Insurance Corporation announced a buyout of its “BHS2” scheme covering £800m worth of liabilities. The scheme was set up last year following a £363m cash injection from Sir Philip to end action against him by the Pensions Regulator.

The Topshop owner said in an interview earlier this year that selling the 88-yearold retailer to Mr Chappell in 2015 was the “worst mistake” of his life.