Accounting roundup: UK politician demands answers over BHS audit
The chairman of the UK parliament’s Work and Pensions Select Committee has demanded information from auditors PwC about its dealings with the parent company of failed retailer BHS.
In particular, Field asked whether he or any PwC staff were present at meetings during which the sale of BHS was agreed.
The retailer, which was owned by Sir Philip Green’s Taveta Group, collapsed in 2016, a year after Green sold it for £1 to Retail Acquisitions Limited.
BHS’s collapse led to the loss of 11,000 jobs and left a pension deficit amounting to £571m (€645m). This was substantially reduced after Sir Philip agreed to pay £343m towards the scheme’s funding.
The move follows the announcement by the Financial Reporting Council (FRC) that it had fined PwC £6.5m over audit failings related to BHS.
They also fined Denison £325,000 and suspended him from audit practice for 15 years.
Field has asked for information in relation to the number of auditors working on the BHS and Taveta audits, the fees charged, and details of non-audit work.
He also asked PwC to explain whether it had indemnified Denison in respect of his penalty.
Updated good practice guide for pension accounting
The Pensions Research Accounting Group (PRAG) has issued an updated version of its 2015 Statement of Recommended Practice (SORP).
Prompting the changes to the statement have been a number of amendments to Financial Reporting Standard 102 (FRS 102) as well as changes to pension legislation – in particular the withdrawal of detailed investment disclosure requirements.
Kevin Clark, who chairs the PRAG’s working party, said: “Since the previous SORP was published in 2015, there have not been significant industry developments that impact on pension scheme financial reporting.”
The implementation experience of the 2015 SORP had not given rise to any significant issues among practitioners, he added.
Instead, the main changes to the SORP were aimed at securing consistency with accounting standards and legislation.
The amendments substantively followed joint guidance issued by the Investment Association and PRAG in May 2016.
Among the amended disclosure requirements were changes to bring the SORP into line with FRS 102 in relation to going concern, fair value and related-party transactions.
FRS 102 is the unified accounting standard that is the principle source of the UK’s generally accepted accounting principles.
The PRAG is an industry body that is recognised by the FRC for the purpose of issuing accounting guidance for pension schemes.
SIG faces regulatory investigation
Meanwhile, the FRC has announced it is to investigate Deloitte’s audit of SIG, a manufacturer of construction materials.
In a statement, the accounting regulator said its investigation would focus on cash and supplier rebates. It has delegated the investigation to the Institute of Chartered Accountants of England and Wales.
In December 2016, the FRC’s Financial Reporting Lab singled out SIG’s dividend disclosures for praise. The same report also pointed to dividend disclosures by failed outsourcing group Carillion as an example of good practice.
In May, the joint chairs of the pensions and business select committees wrote to the FRC to express their concern that the watchdog had singled out Carillion’s disclosure of its dividend policy as an example of good practice.
FRC publishes names of companies under review
Finally, the FRC has published its first list of companies whose reports and accounts have been reviewed by its Corporate Reporting Review (CRR) section.
All of the accounts under review relate to the 31 December 2016 year end.
The FRC’s conduct committee changed its operating procedures in 2017 to enable it to publish the names of companies whose report and accounts it had reviewed.
The move followed feedback from investors who said they wanted additional transparency around the CRR’s activities.