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LONDON (Reuters) – PwC should have flagged significant doubts over the future of BHS in an audit that was completed just days before the loss-making UK retailer was sold for a token one pound in 2015, ahead of its collapse a year later, a regulator said on Wednesday.
BHS had 163 stores and employed 11,000 people when it collapsed in 2016, triggering a political firestorm.
Financial - Reporting - Council - FRC - Watchdog
The Financial Reporting Council (FRC) watchdog fined PwC in June a record 6.5 million pounds ($8.3 million), and former partner Stephen Denison 325,000 pounds. Denison was also banned from auditing for 15 years.
After pressure from lawmakers, the FRC published documents on Wednesday detailing the eight allegations of misconduct that prompted the penalties.
PwC - Wednesday - Work - Standards - Settlement
PwC said on Wednesday it was sorry its work fell well below the professional standards expected. “This is unacceptable and we agreed the settlement recognizing that it is important to learn the necessary lessons,” it said in a statement.
PwC is one of the world’s top four auditors, along with KPMG, Deloitte and EY, which check the books of most blue-chip companies across the globe.
Scrutiny - Britain - Company - Collapses - Audits
They are coming under intense scrutiny in Britain over how they failed to spot company collapses and for juggling audits and more lucrative non-audit work for the same clients.
Lawmakers have said they may formally request higher fines once the FRC published the details of its probe into PwC. They called the FRC “toothless” over its handling of the BHS audit, and the watchdog’s powers are being independently reviewed.
Documents - Calls - Audit - Operations - Audit
The documents are likely to spark fresh calls for the audit and non-audit operations of the big four audit firms to be split up.
At the core of an audit, accountants are required to say if they think a company is a “going concern”, meaning it can stay in business for the foreseeable future. The FRC looked...
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