UK Edition
PwC partner banned for 15 years over BHS audit
A former partner at PwC has been banned from audit work for 15 years and hit with a half a million pound fine over his auditing of BHS’s accounts before it was sold by Sir Philip Green for £1.
Steve Denison was slapped with the fine by the Financial Reporting Council (FRC) in relation to the standard of the collapsed retailer’s audit for the year to Aug 30 2014.
PwC was also hit with a record £10m penalty over the inquiry. This is biggest sanction imposed by the accountancy regulator in its history. Both PwC and Mr Denison had their penalties reduced, to £6.5m and £325,000 respectively, after agreeing to settle early.
The sanctions come after the FRC launched an investigation into the BHS auditing work in June 2016 following “suspicion of misconduct”.
Mr Dension, who was the lead partner on the BHS audit, left PwC last week following more than three decades at the firm. His personal contact page has since been removed from the accountancy giant’s website.
Mr Dension, who was the senior partner of PwC’s UK Northern region, covering offices across Yorkshire and Lancashire, is also chairman of the Yorkshire Country Cricket Club. He has agreed to be removed from the register of statutory auditors.
The FRC said that PwC has also agreed to review and amend its policies and procedures to ensure that audits of all non-listed high risk or high-profile companies (including private companies which employ at least 10,000 individuals in the UK) are subject to an engagement quality control review.
The firm will monitor its Leeds office and provide the watchdog with detailed annual reports about the office for the next three years.
The FRC introduced tough new punishments at the beginning of June in an attempt to clamp down on shabby performance and clean up an industry blighted by scandals
“Seriously poor audit work” will land big four auditors with fines of £10m or more, the FRC said in April. The fines could be substantially more if their wrongdoing was found to be deliberate.
Individuals guilty of dishonesty could be barred from the accounting profession for a minimum of 10 years, under the new rules. The rules come from a review by a panel chaired by former Court of Appeal judge Sir Christopher Clarke. Its findings are being implemented in full.
PwC faced a series of successive record fines last year, including £5m for its audit of Connaught which collapsed in 2010, and £5.1m for its audit of RSM Tenon in 2011.
Sir Philip Green faced intense political scrutiny after selling BHS for £1 just over a year before it collapsed in April 2016, hitting 11,000 jobs, 19,000 pension holders and leaving a £571m black hole in its pension scheme.
He later agreed to pay £363m towards the scheme to end action against him by the Pensions Regulator.
A spokesman for PwC said: “We recognise and accept that there were serious shortcomings with this audit work and that it is important to learn the necessary lessons. We are sorry that our work fell well below the professional standards expected of us and that we demand of ourselves.”