Accountancy watchdog launches probe into PwC audit of BHS

FRCThe Financial Reporting Council (FRC) has opened an investigation into PwC’s audit of collapsed retailer BHS.

The accountancy regulator said its probe was into the year ending 30 August 2014, when the firm was still owned by Sir Philip Green.

Responding to the move, PwC said it would co-operate fully with the investigation.

But the global firm could face heavy sanctions if misconduct is found.

The FRC’s biggest financial penalty to date has been the £3.5m imposed on PwC’s fellow ‘big four’ firm Deloitte after it was found that advice it gave investors involved in collapsed British carmaker MG Rover had failed to identify conflicts of interest when it acted as adviser to the mar manufacturer’s directors.

The watchdog’s probe will look at PwC’s role in the deal that saw Sir Philip sell BHS to Dominic Chappell’s company Retail Acquisitions for £1 in March 2015.

The retail chain collapsed into administration just 13 months later.

Earlier this month, BHS administrator Duff & Phelps, which took control of the business in April, was forced to admit that it could not find a buyer.

It blamed “seismic shifts” in the retail sector for the collapse of the chain.

FRC spokesperson Peter Timberlake said it was impossible to say how long the investigation would take because it depended on the co-operation of external parties including lawyers and auditors.

“It’s obviously of high public interest and we will resolve it as soon as we can. But it’s important that we do the right job,” he said.

If the FRC finds evidence of misconduct, the watchdog will refer the case to an independent tribunal.

If the tribunal agrees with the FRC’s conclusion then it has the ability to levy sanctions including fines as well as the exclusion of individuals from the accountancy profession.

BHS stores are currently in the process of being wound down.

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