The former PwC partner in charge of British Home Stores (BHS) audits, Steve Denison, only spent two hours on audits before the company was sold in 2015 for £1, delegating much of his work to a junior colleague, according to a leaked Financial Reporting Council (FRC) report.
According to the leak, published in the Times, the UK’s Financial Reporting Council (FRC) found failings of the Big Four firm meant accounts for BHS contained ‘incomplete, inaccurate and misleading’ statements about the company’s ability to continue as a going concern.
The report said the firm ‘should have concluded that a material uncertainty existed’ about BHS’s ability to survive outside its holding company, Taveta.
Denison reportedly signed off BHS’s accounts late and then backdated them. According to The Times, Denison’s lawyer Jane Howard of Reed Smith wrote to the FRC on Friday to say the report was not an “accurate, fair and balanced view of events”.
PwC and Steve Denison were fined £6.5m ($8.29m) and £325,000 respectively by the FRC in June. Denison was barred from performing any audit work for a period of 15 years and PwC was ordered to monitor and support its Leeds Audit Practice and provide detailed annual reports about the practice to the FRC for the next three years.
Despite the sanctions and fines leveed on Denison and PwC, the regulators full report was not released.
Following the sanctions, the former select committee which led the parliamentary inquiry into BHS asked why the full report was not released, as it believed it was necessary to establish whether its fines and sanctions were justified.
BHS’s former owner, Philip Green, attempted to have an injunction placed on the report to block its publication. While the bid for the injunction failed, a judge ruled that Taveta could argue it was owed a duty of fairness.
The report supposedly makes clear that it does not contain any findings on BHS after the 2014-2015 audit or anyone other than PwC and Steve Denison.
The FRC declined to comment to the International Accounting Bulletin due to the report not officially being published. However, the regulator said it would ‘publish the report in the public interest as soon as we can’.