Jessica Fino 21 Jun 2018 11:11am

MP demands answers from PwC over BHS audit

The chair of the Work and Pensions Commission has written to PwC and its former audit partner Steve Denison questioning their involvement in the sale of BHS

Frank Field, who was co-chair of the joint select committee inquiry into BHS, asked PwC to confirm that it will be paying Denison’s fine of £350,000. It has been reported that PwC indemnify all their partners against fines.

Last week, the Financial Reporting Council (FRC) fined PwC £6.5m (after a 35% reduction from £10m for early settlement), and ordered that Denison to not perform any audit work for 15 years both admitted misconduct in their BHS audit work.

In his letter, Field asked the Big Four firm for more details about its audit work at BHS, namely how many members of staff worked on the audit for how many hours and what were the charge out rates for each grade level of the audits.

He also asked what non-audit services were individual members of the audit team providing to BHS and the Taveta Group, and what safeguards were put in place to protect against any potential conflicts of interest.

Field also wrote to Denison questioning him about his involvement in the sale of BHS by Sir Philip Green to Retail Acquisitions in March 2015 for £1.

The 2014 audit of BHS was signed off by Denison in March, just five days before the sale to Dominic Chappell’s RAL group and two months earlier than in previous years.

Field said the “quick completion” of the BHS audit was “clearly an important step” in the sale of BHS.

Denison has previously stated that PwC had “no role in relation to the sale”, but the MP asked him to confirm whether he or any other member of PwC staff were present at the meeting where the sale was agreed.

PwC said it would respond to the letter in due course.

The committee has also written again to the FRC asking for additional information about these sanctions and what further action it might be taking.

Field previously wrote to the regulator asking why it had not published the full details of PwC’s misconduct into the BHS audits and asking if it was considering widening its investigation.

However, it emerged days later that Green’s company Taveta Investments, which owns Arcadia Group, made an application for a judicial review designed to stop the FRC publishing the entire findings of its investigation.