PwC Faces FRC Investigation Over WH Smith Audit Following Accounting Irregularities

The U.K.’s Financial Reporting Council (FRC) has launched an investigation into PwC’s audit of WH Smith’s financial statements for the year ended August 31, 2024, following the retailer’s disclosure that profits at its North American business had been overstated by up to 50 million pounds.

The probe, initiated under the FRC’s Audit Enforcement Procedure, will examine PwC’s audit work following the identification of accounting irregularities in the company’s US operations. The issue relates to supplier income that was reportedly recognised earlier than it should have been. The development comes alongside an inquiry by the Financial Conduct Authority (FCA) into possible breaches of listing and disclosure requirements.

PwC, which had served as WH Smith’s auditor for more than a decade, has said it will cooperate with the investigation.

The accounting issue led to changes in WH Smith’s leadership, including the departure of former Chief Executive Officer (CEO) Carl Cowling. Ian Quinn subsequently took over as Executive Chairman and has initiated measures aimed at strengthening governance and oversight.