PwC fined £10m for collapse of retailer BHS, but will pay only £6.5m
London — PwC, which audited the accounts of collapsed British retail chain BHS, has been fined £10m and ordered to review all policies for handling high-risk companies.
The sanction, announced by the UK’s Financial Reporting Council on Wednesday, follows a two-year inquiry in which PwC admitted misconduct.
The fine is to be reduced by 35% to £6.5m for agreeing to an early settlement, the watchdog said.
In addition, Steve Denison, one of the company’s former partners, has been fined £500,000, reduced to £325,000 in return for his co-operation with the inquiry.
Denison, who was also banned from audit work for 15 years, left PwC in June after a nearly 33-year career there, according to his LinkedIn profile. He did not immediately respond when contacted via LinkedIn.
The Financial Reporting Council launched an investigation of the PwC audit in 2016, a year after it signed off BHS as a "going concern" and billionaire retailer Philip Green sold the loss-making group for £1.
"We recognise and accept that there were serious shortcomings with this audit work and that it is important to learn the necessary lessons," PwC said in an e-mailed comment to Reuters.
"We are sorry that our work fell well below the professional standards expected of us and that we demand of ourselves."
The watchdog also ordered PwC to supply it with detailed annual reports about its audit practice in Leeds for the next three years, and to review and amend its broader policies to ensure audits of all nonlisted, high-risk or high-profile companies were subject to an engagement quality control review.
The failure of BHS, a 180-store chain, was the biggest collapse in the British retail industry since the demise of Woolworths in 2008. It prompted intense scrutiny.
BHS’s pension deficit had ballooned to £571m by the time the retailer went into administration in April 2016, a figure based on what an insurance company would pay if it were to buy out the funds. About 11,000 jobs were lost.
Last year Green paid £363m to BHS’s pension schemes.