The senior PricewaterhouseCoopers accountant who audited BHS's accounts ahead of its sale for £1 just a year before the department store chain collapsed is facing a 15-year ban and six-figure fine from the industry watchdog.
Steve Denison, who spent more than 30 years at PwC according to his LinkedIn profile, becoming a partner, is understood to have been facing a £500,000 fine from the Financial Reporting Council (FRC), reduced to £325,000 after he agreed to cooperate.
Let's leave aside the appropriateness of the penalty: that appears to require no further discussion.
What is worth noting is the 15-year ban. For all practical purposes, this is a life sentence: no one will ever go back to auditing after fifteen years.
And apparently this person has now left PWC.
This is the sort of sanction that works. £325,000 is less than a year's net pay for this person. Painful, but still leaving what many would think a dream like sum to live on. But a life ban on earning that income sends out a very powerful message indeed.
More such sanctions are required.
Ideally backed by action from the person's professional institute as well. If this is not bringing the profession into disrepute I am not sure what is.
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Totally agree: many people lost their jobs because of this person’s lack of professional diligence. Were he an architect he would likely have been struck off by now by the Architects’ Registration Board and one has to presume that he was a Chartered Accountant (lest why would he be in the position to sign off a company audit?) so why no action from his professional institute? That he has escaped jail for perpetrating what is essentially a fraud is why fewer and fewer people trust either the City of London, the banks, the legal system and the government to take appropriate action – maybe because it’s not a case of a few bad apples but of a totally corrupt relationship between each of these agencies?
Steven Denison was the senior partner of PwC’s northern region until quite recently. He appears to have disappeared from the website, and I expect ICAEW disciplinary action will be following. Rather a sad end to a 32 year career.
I expect he has family and outgoings to match his income – £325,000 is a large sum for anyone to pay – so this is a personal tragedy for him. Yes, he got things wrong with BHS, he admitted it, and the punishment may be deserved and appropriate, but nonetheless let us not forget that he is a human being too.
No one is stopping him earning a living and I am sure he could
But he was paid exceptionally for getting things right
He did not
This is the consequence. I cannot get very sympathetic as a result
I think the only effective penalty is to close the LLP for any new business for a period of time, depending on the severity of the offence.
Imagine if these LLPs knew they could be closed for new business for a week, a month or a year then their behavour would change.
This would radically ater the big 4s influence in this sector.
They are in other countries on occassion banned from taking new work for periods
That is pretty powerful
Have they published details of what he did/didn’t do?
He signed BHS’s accounts
does he have to pay the fine – ie whats the sanction if he dosent, its not like kicking him out of the institute is going to be a threat to him. Are the fines criminal/civil or something else?
given his age I assume he was probably going to retire anyway
I suspect the debt ius unenforceable if he resigns from his professional institute, but am unsure of this
There are certainly occasions when members are expelled for not paying fines, implying recovery does not always take place and no alternative action to recoup the sum due is taken
The Financial Reporting Council is the “competent authority” under the Statutory Auditors and Third Country Auditors Regulations 2016 (SI 2016/649) with the power to impose sanctions, including financial penalties, and enforce those sanctions (and collect the penalties) through the courts.
Thank you
So the FRC has succeeded (for now) in a damage limitation exercise by singling out one person rather than charge PWC .
I suppose it’s something, and might serve to make some of his colleagues wonder at their own security in similar circumstances and perhaps encourage then to be more circumspect.
It has resonances of NIck Leeson being hung out to dry.
Maybe I’m being churlish in not recognising that this just might represent a change of course by the regulator. But I’m not holding my breath.
PWC is being penalised too
Indeed, PwC was fined much more: £6.5m (also with a 35% discount for cooperation and an early admission of fault).
I wonder how much their audit fee was.
BHS was just a piece of a very complex jigsaw which still trades via Jersey and Monaco and no doubt other places.
Which part or parts did he “sign off,” who shall be inspecting the other accounting books and will he be “struck off” internationally?
He signed off BHS
The rest has been left alone
So there is more work to do, and much of it is intentionally left undone.
Nevertheless we are, as you say, moving in the right direction.
I suspect PWC will have paid his fine which is what Deloitte did for a partner in a similar circumstance.
Struck off and banned from acting in the tax and accounting industry would be appropriate as otherwise PWC will employ him as a highly paid ‘escape goat consultant’ – maybe the senior partner said “well done someone occasionally has to take a hit I hope our generous pension and employment for the rest of you life will use up some of the millions we took for fraudulent accounts and defrauding others”.
The fines IMO should be material to the firm, just like the false books were material to those affected. Is 3% material enough?
That thought had occurred to me.
Unless he is to be punished for being found out !