June 5, 2019 / 3:43 PM / 2 months ago

PwC overhauls UK audit arm after BHS collapse

LONDON (Reuters) - PwC, one of the world’s “Big Four” accounting firms, said it will spend an extra 30 million pounds ($38 million) to beef up its audit business in Britain, where the sector faces a shake-up after corporate collapses.

FILE PHOTO: The logo of PricewaterhouseCoopers is seen in front of the local offices building of the company in Luxembourg, April 26, 2016. REUTERS/Vincent Kessler

PwC said it will hire an extra 500 auditors across Britain, increase training, create a new digital audit team, and review clients to ensure “we achieve a return that allows continual investment in and focus on quality”.

It stops short of recommendations from the Competition and Markets Authority (CMA) for audit activities at the “Big Four” to be operationally separate from the more lucrative consultancy work. Accounting sector officials have questioned whether this would actually improve audit quality.

The collapse of construction company Carillion and retailer BHS led the CMA to make its recommendations, but Britain’s government has yet to propose legislation to implement them.

The Big Four have voluntarily agreed not to offer consultancy services to their audit clients.

“We have said for some time that we support changes that will improve audit quality,” Hermione Hudson, head of audit at PwC in Britain, said about the changes announced on Wednesday.

PwC, which audited BHS, said it was also commissioning an independent report from an academic on what a culture of challenge means for auditors.

Lawmakers have said a sector shake up was needed to make auditors more willing to challenge what their clients tell them.

Rival KPMG, which audited Carillion, has announced that from this month there will be more separate performance management and governance of its audit business.

($1 = 0.7859 pounds)

Reporting by Huw Jones; Editing by Elaine Hardcastle

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