PwC auditor spent just two hours on BHS audit, says chairman

PwC auditor spent just two hours on BHS audit, says chairman

In a damning email circulated to PwC partners, Kevin Ellis said Steve Denison spent only two hours on the audit and backdated his audit opinion

PwC auditor spent just two hours on BHS audit, says chairman

In an email seen by Sky News, Kevin Ellis, chairman of PwC UK, reportedly blasted partner Steve Denison over his audit work for BHS, which last week led to a six-figure fine and 15-year ban for Denison and a record £10m fine for the Big Four firm (reduced to £6.5m).

In the email circulated to the firm’s nearly 1,000 partners, Ellis reportedly said his Denison’s work was “inadequate”.

The chairman outlined Denison’s numerous failings in overseeing the audit, such as “delegating too much work to a junior team member and only recording two hours of work during the completion stage.”

Furthermore, Ellis said that Denison had backdated his audit opinion, which said BHS was a going concern, by three days and that he “made a false statement on the audit file relating to the circumstances of the backdating”.

The audit report for BHS’ 2014 accounts was signed off on by PwC just days before Sir Philip Green sold the department store chain for £1.

Although he said these actions were “unacceptable”, Ellis added that they did not impact the audit opinion itself.

Ellis acknowledged that the email would make “uncomfortable reading” for PwC employees.

He said: “This situation should not have happened and we need to face up to the failings and learn the lessons.”

The Financial Reporting Council (FRC) banned Denison from undertaking any audit work for 15 years and fined him £500,000, reduced to £350,000.

Case unfolds in the courts as parliament committee questions PwC

MP Frank Field, chair of the work and pensions committee, this week wrote letters to both PwC and Denison individually, requesting further information on how the audit was conducted.

He asked PwC for details on how many staff members worked on the audits of BHS and Taveta Group broken down by grade and the hours of work each grade performed.

He also inquired about which non-audit services were provided to the companies by individual members of the audit team, and what safeguards were put in place to protect against any potential conflicts of interest.

Field also asked PwC whether it is correct that the firm indemnifies all their partners against fines and whether they will pay Denison’s.

To Denison, Field wrote that the quick completion of the BHS audit was “clearly an important step in the sale of BHS to Retail Acquisitions Ltd.” Although Denison previously said that PwC had “no role in relation to the sale”, Field queried whether Denison or any PwC employee was present at the meeting where the sale was agreed.

Meanwhile, Sir Philip Green has requested a gag order to redact some parts of the FRC’s report on the BHS scandal, arguing it could cause “serious and potentially irreparable harm” to his reputation and those of former BHS executives.

Related Articles

FRC fines reach record high after 24% increase this year

Audit FRC fines reach record high after 24% increase this year

4d Alia Shoaib, Reporter
PwC replaces Deloitte as Linklaters auditor after Arsenal lawsuit

Audit PwC replaces Deloitte as Linklaters auditor after Arsenal lawsuit

6d Alia Shoaib, Reporter
New FRC Corporate Governance Code focuses on culture and diversity

Audit New FRC Corporate Governance Code focuses on culture and diversity

7d Lucy Skoulding, Reporter
PwC ordered to pay $625.3m over failure to detect Colonial Bank fraud

Audit PwC ordered to pay $625.3m over failure to detect Colonial Bank fraud

3w Alia Shoaib, Reporter
FRC to investigate KPMG’s Conviviality audit

Audit FRC to investigate KPMG’s Conviviality audit

3w Alia Shoaib, Reporter
June news roundup with Alia Shoaib

Audit June news roundup with Alia Shoaib

3w Alia Shoaib, Reporter
FRC opens investigation into Deloitte’s audits of SIG

Audit FRC opens investigation into Deloitte’s audits of SIG

4w Alia Shoaib, Reporter
FRC reports an “unacceptable deterioration” in KPMG audit quality

Audit FRC reports an “unacceptable deterioration” in KPMG audit quality

1m Alia Shoaib, Reporter