In our monthly roundup of developments in audit and governance, PwC slated for ‘misleading’ BHS audit, revised Corporate Governance Code, Grant Thornton cleared of misconduct over Globo audit, auditing accounting estimates standard to be revised
PwC slated for ‘misleading’ BHS audit
The Financial Reporting Council (FRC) has made public an excoriating report on PwC’s audit of BHS which describes the firm’s reporting as ‘incomplete, inaccurate and misleading’.
The FRC has been under attack from MPs on the joint work and pensions and business, energy and industrial strategy (BEIS) select committee for its failure to publish details of the settlement agreement.
The FRC investigation into the 2014 audits of BHS and Taveta Group resulted in a £10m fine for PwC, reduced to £6.5m on settlement, and a £325,000 fine for audit partner Steve Denison, reduced from £500,000.
In its settlement agreement, the regulator said information about the likely sale of BHS emerged during the audit, resulting in the completion date being brought forward, so the firm and Denison should have been aware that BHS’s financial statements were to be subject to increased scrutiny. In December 2014, Denison recorded one hour on the audit, followed by two hours during the period 1 January 2015 to 9 March 2015 prior to sign off. Work was delegated to a junior team member who had only one year of post-qualification experience and who told the inquiry she was not aware that BHS was being sold.
