The Financial Reporting Council has announced that it will open an investigation into PwC's audit of collapsed retail giant BHS.
In a statement the accountancy regulator announced that it will investigate the Big Four firm’s audit of BHS’s financial statements for the year ended 30 August 2014.
During this period BHS was still owned by Sir Philip Green, who sold the chain to Dominic Chappell's company Retail Acquisitions for £1 in March 2015.
A preliminary investigation, which confirmed a "suspicion of misconduct", has already been carried out, paving the way for the formal investigation process to begin.
The former high street giant collapsed earlier this month after administrators Duff & Phelps failed to find an buyer for the business, putting all of its 164 stores and 11,000 jobs at risk, and leaving a £570m black hole in the company’s pension fund.
A spokesperson from PwC said it would co-operate fully with the investigation, while an FRC spokesperson said it was “impossible” to predict how long the investigation would take because it depended on the co-operation of external parties, including lawyers and auditors.
"It's obviously of high public interest and we will resolve it as soon as we can. But it's important that we do the right job," he said.
Should the FRC uncover evidence of misconduct, the regulator can refer this to an independent tribunal, which has the power to levy unlimited fines on organisations and exclude individuals from the accounting profession.
A joint BIS and DWP committee of MPs are currently running an inquiry into the demise of BHS, and recently questioned former owner Green in a stormy session in parliament. Green apologised for the collapse of the retail chain and promised to ‘sort’ the pension deficit left by the failure, but he also railed against Chappell, the pension regulator and the committee in a six-hour evidence session.
In a statement to the committee PwC said the completion of the BHS audit was brought forward to the beginning of March at the request of the company, and because of the potential sale to Retail Acquisitions.
Simon Walker, director general of the institute of directors has also advised the FRC to investigate both Grant Thornton and the law firm Olswang, both of whom advised Retail Acquisitions during the purchasing process.