The work and pensions select committee has challenged PwC and audit partner Steve Denison for more details about their work on the audit of BHS and the Taveta group accounts, which were signed off on a going concern basis days before the retailer was sold for £1
The move follows the announcement of a record £6.5m fine (reduced on settlement from £10m) levied by the Financial Reporting Council (FRC) against PwC, and a £325,000 fine for Denison relating to the 2014 audits (discounted from £500,000).
Frank Field, the chair of the work and pensions select committee, has already written to the FRC asking for additional information about these sanctions and what further action they might be taking.
The work and pensions select committee has highlighted that the BHS accounts were signed off earlier than was usual, in March rather than May. Shortly afterwards the company was sold to Dominic Chappell’s Retail Acquisitions Ltd (RAL) for £1. It collapsed a year later.
The letter to Denison states: ‘The quick completion of the BHS audit, signed off by yourself on March 6, was clearly an important step in the sale of BHS to Retail Acquisitions Ltd.
‘Whilst your evidence to us on 23 May 2016 confirmed that PwC had “no role in relation to the sale”, could you confirm whether you, or any other member of PwC staff were present at the meeting where the sale was agreed?’
In his letter to PwC, Field asked the firm for details about the audit work conducted. These include the numbers of working on the group audit and the BHS audit, broken down by grade, plus details of how many hours each grade level performed on the group and the BHS audit and their charge out rates.
Field also asked for information about any non-audit services individual members of the audit team were providing to BHS and the Taveta Group, and what safeguards were put in place to protect against any potential conflicts of interest that might have been apparent.
In addition, the letter asked the firm to share with the committee the planned audit timetable detailing key milestones and the actual dates at which those milestones were achieved.
Field also says it has been reported that PwC indemnify all their partners against fines, and that as a result it will fall to PwC to pay Steve Denison’s fine, and asked if this information is accurate.
Frank Field letter to Steve Denison is here.
Frank Field letter to PwC is here.
Report by Pat Sweet
