The UK’s Financial Reporting Council (FRC) has been questioned over its reasons for the £6.5m (£8.65m) it administered to PwC for its work related to the collapsed retailer British Home Stores (BHS).
In a letter addressed to the FRC, Frank Field, the former select committee co-chair which led the inquiry into BHS, has asked the FRC to explain the ‘misconduct’ it mentioned in a statement announcing the fine. Field stated in his letter that having only this justification makes it ‘difficult to establish whether they [the fines] were appropriate’.
The FRC was also questioned on why it has not published a report of its investigation into PwC and former partner Steve Denison, who was also subject to a £325,000 fine, and whether the FRC intends to publish a report in the future.
Despite Field’s questioning of the regulator’s reasoning, he said the ‘unprecedented fines’ on PwC and Steve Denison was ‘welcome’.
Field also asked the FRC if it intended to investigate previous PwC audits of BHS and its former parent company Taveta. In the FRC’s statement it said the fines were only levied in relation to the 2014 audits. Field commented that PwC had a ‘longstanding relationship’ with Taveta, having being paid £16.1m by the group between 2004 and 2017.
He also questioned the FRC if it believed PwC to have had a conflict of interest in relation to auditing both BHS and the company that was attempting to sell it and also due to the Big Four firm providing other services to Taveta which were ‘substantially more lucrative than its statutory audits’.
