Sir Philip Green has been asked by a parliamentary committee to “prove” why he thought BHS was in secure financial health before he sold it, following a damning report into its audit.
Yesterday the Financial Reporting Council (FRC) released a report slamming the financial firm PwC for its handling of BHS’s audit and accounts before its public collapse, which saw it fine the company £10 million in June.
PwC’s audit of BHS before it was sold to Dominic Chappell for £1, then part of Green’s larger holding company Taveta, said it was a “going concern”.
This suggested the company was in relative financial health and could continue trading indefinitely, but the PwC said there were several signs the business was struggling.
Head of the parliament’s work and pensions committee Frank Field, who has historically been one of Green’s most active critics, has now called on Green to prove he felt BHS was a “going concern”.
“I would therefore like to invite Taveta to publish your going concern assessment to prove that there was indeed a suitable case for presenting BHS as a going concern,” he said in a letter yesterday.
In response to the report released yesterday by the FRC, which accused PwC’s audit of BHS of being “inaccurate” and “misleading”, Taveta said:
“While the FRC has since made a number of revisions to its report to address some of the serious issues we have raised, the report still gives an incomplete and potentially misleading picture into BHS’s affairs.
“As is widely known, Taveta provided significant financial support to BHS whilst it was under its ownership.
“However, the report fails to make any reference to the fact that Mr Denison was aware (as we understand he informed the FRC) that substantial assets would also be made available to BHS as part of any sale, which was ultimately the case.
“As we confirmed to the FRC, Taveta made available to BHS substantial cash, real estate assets and bank guarantees at completion of the sale which supported the business plan and allowed it to continue to trade.
“Therefore the report fails to accurately reflect the actual position, and as a result is unbalanced and potentially unfair to Taveta.”