The Financial Reporting Council (FRC) is to investigate PwC over its auditing of BHS for the 2014 financial year, following on from criticism of the firm’s actions in signing the retailer’s accounts off as a ‘going concern’ from the select committee investigating the company’s collapse and its pension deficit.
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’.