PwC braced for record fine over audit of BHS
BIG FOUR audit firm PwC is braced for a stinging fine from the accountancy regulator for its role in auditing collapsed retailer BHS.
PwC has been under investigation for two years over its conduct. The firm signed off on the store chain as a ‘going concern’ only days before former owner Sir Philip Green sold it to serial bankrupt Dominic Chappell for a token £1. The Financial Reporting Council (FRC) could deliver the findings of its long-running probe as soon as this week.
Accountancy sources believe it could be in for a record fine in excess of £5million. The lead partner on the BHS audit, Steve Denison, could also be sanctioned, under FRC rules.
The FRC is under Government pressure to crack down on the Big Four firms – PwC, KPMG, Deloitte and EY – after a string of accounting scandals including BHS, HBOS and Carillion.
In April, the watchdog said it would double the fines for poor audit work by Big Four firms to £10 million from this month.
PwC was given the FRC’s biggest-ever fine of £5.1 million last August, for ‘extensive misconduct’ in its audit of professional services firm RSM Tenon. Following the BHS sale to Chappell in March 2015, the firm went bust with a £571 million hole in its pension fund.
PwC stepped down as BHS’s auditor after its sale, having given the loss-making retailer’s finances for the year to August 30, 2014 a clean bill of health. It also advised Sir Philip’s retail group on the BHS pension scheme between 2009 and 2013.
PwC and the FRC both declined to comment.