In a statement the regulator said it has ‘launched an investigation under the Accountancy Scheme into the conduct of PricewaterhouseCoopers LLP in relation to the audit of the financial statements of BHS Limited for the year ended 30 August 2014.’

The joint BIS and DWP committee of MPs is running an inquiry into the failure of BHS just a year after it was sold to Retail Acquisitions Ltd (RAL) for £1. PwC representatives were questioned about why the firm failed to raise any significant issues in the accounts, after the MPs heard evidence that the sale was prompted by concerns to avoid a possible insolvency.

In a written reply to committee member and MP, Richard Fuller, over going concern issues, PwC said the completion of the BHS audit for the year ending 31 August 2014, whereby most of the work was done in late 2014, was brought forward to the beginning of March at the request of the company and because of the potential sale.

Five days after the auditor’s report was formally signed off on 6 March 2015, BHS was sold to RAL on 11 March. A year later the company went into administration, with the loss of some 11,000 jobs. Under the accountancy scheme the FRC’s conduct committee will consider the case and decide whether or not the criteria for an investigation are met.

The regulator is already investigating PwC’s handling of another retailer’s accounts, after Tesco discovered a £263m ‘black hole’ related to the way supplier payments were booked. This FRC inquiry is looking at Tesco’s financial statements for the years ended 25 February 2012, 23 February 2013 and 22 February 2014 and the firm’s ‘conduct in relation to the matters reported in the company’s interim results for the 26 weeks ended 23 August 2014’.

Responding to the FRC’s investigation, a spokesman for PwC said: 'We will co-operate fully with the FRC in its enquiries'.