LONDON, June 12 (Reuters) - A partner at PricewaterhouseCoopers (PwC), who audited the accounts of collapsed department store chain BHS, faces a hefty fine and 15-year ban after a two-year inquiry by the industry regulator, a source with direct knowledge of the matter said.
The Financial Reporting Council (FRC) launched an investigation into 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 pound.
PwC veteran Steve Denison could face a fine of up to 500,000 pounds ($668,000) in an announcement that could come as soon as tomorrow, the source said on Wednesday. Sky News, which first reported the news, said the penalty could be reduced to 325,000 pounds.
PwC, one of the UK’s Big Four professional services firms, could be fined around 6.5 million pounds, reduced from 10 million pounds, for agreeing to settle early, according to Sky.
“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 emailed comment.
“We are sorry that our work fell well below the professional standards expected of us and that we demand of ourselves.”
Denison left the auditor this month after a near 33-year career there, according to his LinkedIn profile. He did not immediately respond when contacted via LinkedIn. The FRC also declined to comment.
The failure of BHS, a 180-store, lossmaking chain, was the biggest collapse in the British retail industry since the demise of high street peer Woolworths in 2008.
It prompted intense scrutiny. Lawmakers investigated how Green had been able to sell the business, with a large pension deficit, to a company run by a serial bankrupt with no retail experience.
BHS’s pension deficit had ballooned to 571 million pounds 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 363 million pounds to BHS’s pension schemes.
$1 = 0.7483 pounds Additional reporting by James Davey Editing by Mark Heinrich