The Financial Reporting Council has sanctioned PwC, along with one of its former audit partners, following an investigation into BHS’ 2014 audits.
Former PwC partner Steve Denison, has been given a £500,000 fine, and has been banned from undertaking any audit work for 15 years, as well as being given a “severe reprimand”. Denison was the auditor for BHS from 2009 until when it was sold to Dominic Chappell in 2015.
He signed the accounts off as a going concern, which is the ability of a company to be able to continue trading for the foreseeable future. Denison was questioned by the Work and Pensions Committee in 2016 over why he signed the accounts off as a going concern, which he said was because BHS was backed by Taveta so there were no concerns at the time.
PwC has been handed a £10m fine and been told to monitor and support its Leeds Audit Practice and provide detailed annual reports about that practice to the FRC for the next three years.
Furthermore, the FRC requires PwC to review and amend its policies and procedures to ensure that audits of all non-listed high risk or high-profile companies (including private companies which employ at least 10,000 individuals in the UK) are subject to an engagement quality control review.
The fines will be reduced by 35 per cent to £6.5m and £325,000 respectively for early settlement. The settlement agreement has been approved by The Right Honourable Sir Stanley Burnton, independent tribunal member.
BHS was infamously sold for £1 in March 2015 by Philip Green to Dominic Chappell but collapsed thirteen months later with a pension deficit of around £570m.
Following its investigation into BHS, The Pensions Regulator said: “The main purpose of the sale of BHS was to postpone BHS’s insolvency to prevent a liability to the schemes falling due while it was part of the Taveta group of companies ultimately owned by the Green family, and/or that the effect of the sale was materially detrimental to the schemes.”