Big Four firm probed over BHS accounts

AN inquiry has been launched into the handling of British Home Stores’ accounts by the Leeds office of PwC.

The Financial Reporting Council has started an investigation into the conduct of PwC in relation to the audit of the financial statements of BHS Limited for the year ended 30 August 2014.

The embattled Sir Philip Green owned the high street retailer at the time, before selling it to Dominic Chappell’s Retail Acquisitions for £1 in March 2015.

Steve Denison of PwC in Leeds is named as the senior auditor on the company’s 2014 accounts. 

In them, the company incurred exceptional charges of £26.1m in creating provisions for the future leasing obligations of the company’s loss-making stores.

Spokesperson Peter Timberlake said that the length of the FRC inquiry depended on the cooperation of lawyers and auditors.

PwC has said it will cooperate fully with the investigation.

If the organisation’s findings are verified by an independent tribunal, sanctions will be enforced. Its biggest to date was a fine of £3.5m for Deloitte over a conflict of interest when advising the directors of MG Rover.

A joint BIS and DWP investigation over the collapse has also seen PwC face questions over why they did not raise any serious concerns over the state of accounts.

Evidence was heard by MPs that the sale to Dominic Chappell only days after the 2014 accounts were signed off was triggered by attempts to avoid insolvency.

In March 2016 BHS proposed a company voluntary arrangement as it attempted to resolve the crippling cost of rent. Creditors approved the CVA, however a shortfall of £100m proved to be too difficult an obstacle to overcome, and one month later BHS was placed into administration.

Administrators Duff & Phelps have been unable to find a buyer for the business, and 11,000 jobs are at risk .

Yesterday it was revealed that more than 1,200 creditors are owed a total of £48.5m, including £2m to 60 Yorkshire businesses .

BHS was founded in 1928 and became a staple of the British high street before its collapse.

 

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