PwC hit with £10m fine for BHS audit failings

The Financial Reporting Council has handed down a record fine of £10m to PwC for failings related to its audit of collapsed retailer BHS.

Audit partner Steve Denison, who was senior partner of PwC’s northern region and is the current chairman of Yorkshire County Cricket Club, has been fined £500,000 and agreed not to perform any audit work for 15 years.

In a statement PwC said: “We recognise and accept there were serious shortcomings with this audit work. We are sorry that our work fell well below the professional standards expected of us and that we demand of ourselves.

“We have agreed this settlement, recognising that it is important to learn the necessary lessons. At its core this is not a failure in our audit methodology, the methodology simply was not followed.”

The fines will be reduced by 35% to £6.5m and £325,000 respectively for early settlement. They are the largest ever fines enforced by the FRC, beating the £6m – reduced to £5.1m by a settlement discount – that was also imposed on PwC for its audit of RSM Tenon.

PwC has accepted a severe reprimand and the £10m fine and has agreed to monitor and support its Leeds audit practice and provide detailed annual reports about that practice to the FRC for the next three years.

It has also agreed that audits of all non-listed high risk or high-profile companies are subject to an engagement quality control review.

PwC added: “Whilst the failings did not contribute to the collapse of BHS over one year later, they were serious and this is reflected in the Financial Reporting Council settlement.”

In June 2016 the Financial Reporting Council started an investigation into the conduct of PwC in relation to its audit of BHS’s 2014 financial results.

Sir Philip Green sold the high street retailer to Dominic Chappell’s Retail Acquisitions for £1 in March 2015.

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