FRC weighs investigation into PwC audit of WHSmith – report

The UK Financial Reporting Council (FRC) is considering starting a ceremonial probe into PwC’s audit enactment for WHSmith’s accounting errors, the Financial Times reported.

The determination comes aft the disclosure of respective years of misstatements successful the retailer’s operations successful the US.

WHSmith, which has relied connected PwC arsenic its auditor since 2015, said that Deloitte’s autarkic reappraisal recovered revenues had been overstated crossed aggregate years successful its US business.

The errors were identified erstwhile a subordinate of the concern squad raised concerns successful August.

Sources said that, arsenic per modular procedure, PwC referred WHSmith’s nationalist announcement to the FRC.

A last determination connected whether to proceed with a ceremonial enquiry into PwC’s audits has not yet been made.

In caller years, PwC’s audit activities person travel nether reappraisal successful transportation with Wyelands Bank and London Capital & Finance, arsenic good arsenic Tesco anterior to its accounting misstatements.

Both the FRC and PwC declined to supply statements, reported Financial Times.

PwC approved WHSmith's fiscal statements during the 3 years successful which profits were aboriginal recovered to beryllium overstated owed to aboriginal designation of supplier income from its US unit.

Following disclosure, WHSmith’s marketplace worth decreased by astir £600m.

The company’s radical main enforcement Carl Cowling stepped down aft Deloitte submitted its findings.

According to WHSmith, Deloitte’s reappraisal concluded that “a backdrop of a target-driven show culture” successful North America and “a constricted level of radical oversight of the concern processes” contributed to the issue.

Deloitte reported nary akin concerns successful different parts of WHSmith’s business, which operates astir 1,300 outlets globally astatine bid stations, airports and hospitals.

The errors related to however supplier payments for promotions were recorded, alternatively of spreading designation implicit clip arsenic goods sold. Deloitte recovered that income was logged erstwhile agreements were made.

This attack resulted successful higher reported profits and enabled elder unit to gain performance-related bonuses, according to radical with cognition of interior matters.

Deloitte determined that these issues would person a greater interaction connected reported profits than antecedently expected, prompting the institution to restate full-year 2023 and 2024 net and revise its trading nett forecast for its US concern downwards to £5m–£15m for 2025, compared with £25m announced successful August.

"FRC weighs probe into PwC audit of WHSmith – study " was primitively created and published by International Accounting Bulletin, a GlobalData owned brand.