Big four auditor PwC is set to be slapped with a hefty fine from the UK’s peak accountancy regulator over its handling of the audit of collapsed high street chain BHS.
The Financial Reporting Council (FRC) began its investigation on PwC two years ago after it emerged that it signed off BHS as as a “going concern” days before Sir Philip Green sold it to former bankrupt Dominic Chappell for just £1 in March 2015.
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PwC stepped down as BHS’s auditor after its sale, but just months prior, it gave the loss-making retailer’s finances for the year to August 30, 2014 a clean bill of health.
BHS collapsed 13 months after Chappell bought it, grabbing headlines and a prompting a parliamentary inquirty after a £571 million black hole in its pension fund was revealed.
According to The Mail on Sunday, the FRC is expected to deliver its findings from the PwC investigation as soon as this week, and the firm could potentially face a £5 million fine.
Sources speaking to the newspaper also speculated that PwC’s lead partner on the BHS audit, Steve Denison, could be sanctioned.
The news comes less than a year after PwC was slapped with the FRC’s biggest-ever fine of £5.1 million last August as a result of “extensive misconduct” in its audit of RSM Tenon.
The FRC has been facing increasing pressure from the government to crack down on the big four accountancy and auditing firms – PwC, KPMG, Deloitte and EY – in light of financial scandals from various sectors, including retail.
In April, the FRC said it would double the fines for poor audit work by Big Four firms to £10 million from this month.
PwC and the FRC have declined to comment.
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