Sanctions against PwC and former audit partner in relation to BHS
12 June 2018
The Financial Reporting Council (FRC) has sanctioned PriceWaterhouseCoopers (PwC) and audit partner Steve Denison in relation to the 2014 audits of BHS and the Taveta Group (Taveta) following an investigation under the Accountancy Scheme opened in June 2016.
PwC and Steve Denison have admitted Misconduct and accepted substantial fines and non-financial sanctions.
* A fine of £10 million;
* A Severe Reprimand;
* A Condition that PwC monitor and support its Leeds Audit Practice and provide detailed annual reports about that practice to the FRC for the next three years;
* An undertaking by PwC 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.
* A fine of £500,000;
* A Severe Reprimand;
* A Condition not to perform any audit work for a period of 15 years;
* An undertaking by Mr Denison to remove his name from the register of statutory auditors and not to apply to have his name re-entered on the register for a period of 15 years.
The fines will be reduced by 35% to £6.5 million and £325,000 respectively for early settlement. The settlement agreement has been approved by The Right Honourable Sir Stanley Burnton, independent Tribunal member.
Notes to editors:
1. The FRC’s mission is to promote transparency and integrity in business. The FRC sets the UK Corporate Governance and Stewardship Codes and UK standards for accounting and actuarial work; monitors and takes action to promote the quality of corporate reporting; and operates independent enforcement arrangements for accountants and actuaries. As the competent authority for audit in the UK the FRC sets auditing and ethical standards and monitors and enforces audit quality.
2. The FRC is the independent, investigative and disciplinary body for accountants and actuaries in the UK dealing with cases which raise important issues affecting the public interest. In brief, the stages of the disciplinary process under the Accountancy Scheme are:
* Decision to investigate
* Decision whether to bring enforcement proceedings against Member Firm or Member and, if so decided, referral to Disciplinary Tribunal
* Tribunal hearing
* Determination and imposition of sanction and/or costs orders
Under the Accountancy Scheme the FRC can start a disciplinary investigation in one of two ways: (i) the professional bodies can refer cases to the FRC; and (ii) the FRC may decide of its own accord to investigate a matter. The Conduct Committee will consider each case identified or referred to it and decide whether or not the criteria for an investigation are met.
The criteria are specified in paragraph 5(1) of the Accountancy Scheme. A Member or Member Firm shall be liable to investigation under this Scheme only where, in the opinion of the Conduct Committee the matter raises or appears to raise important issues affecting the public interest in the United Kingdom and there are reasonable grounds to suspect that there may have been Misconduct or it appears that the Member or Member Firm has failed to comply with any of his or its obligations under paragraphs 14(1) or 14(2) of the Scheme.
Investigations are conducted by Executive Counsel and the Enforcement division.
3. Discounts for early settlement are described in paragraph 59 of the FRC’s 2014 Sanctions Guidance.
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