MPs have called on the Financial Reporting Council (FRC) to widen its recently announced inquiry into PwC’s audit work with failed retailer BHS, which went into administration earlier this year, saying its current focus is too narrow as it only covers one year’s audit
At the end of June, the regulator said it has ‘launched an investigation under the accountancy scheme into the conduct of PricewaterhouseCoopers in relation to the audit of the financial statements of BHS Limited for the year ended 30 August 2014.’
Now Frank Field, chair of the work and pensions select committee, and Iain Wright, chair of the business, skills and innovation (BIS) committee, have written to the FRC challenging the decision. They are heading up a joint committee which is examining both BHS’s collapse into administration a year after it was sold by Sir Philip Green for £1 to Retail Acquisitions Ltd, putting some 11,000 jobs at risk, and the company’s ballooning pension deficit.
In the letter, the MPs say they have concerns that the scope of the FRC’s investigation is too narrow and urge the regulator to look more widely at PwC’s actions. In particular, they want an examination of previous years’ audits where PwC signed off BHS as a going concern, and of PwC audits of the accounts of other Taveta group companies with which the finances of BHS were linked.
In his response Stephen Haddrill, the FRC’s CEO, said: ‘I can confirm that if during the investigation evidence emerges which indicates that a wider time period should be considered, or that the audits of other connected entities should be investigated, our executive counsel can request that the FRC’s conduct committee widens the scope of the investigation.’
The MPs also asked for a date by which the FRC will publish the results of its inquiry. While Haddrill says the regulator does not usually set a deadline, he indicates that the aim is to conclude any investigation ‘in about two years’.
He also says that in recent years the FRC has concluded investigations much more quickly than in the past, but will not be drawn into the timings for this particular case.
‘There are a number of uncertain factors which will influence the timetable, some of which, such as challenges from the firms, we will have no control over. We will work for as rapid a conclusion as possible but when the outcome may culminate in highly contentious litigation we have to take great care,’ Haddrill wrote.
Wright and Field’s letter is here.
Haddrill’s letter is here.
