The UK's accounting watchdog has launched an investigation into PwC over its auditing of WH Smith following a damaging accounting scandal in the retailer's US division.
FRC Probe Details
The Financial Reporting Council (FRC) announced it had initiated a probe into PwC's audit of WH Smith's financial statements for the year ending August 31. The FRC did not disclose specific details of the investigation.
Swindon-based WH Smith admitted last year that it had overstated profits for its North American business by up to £50 million due to issues with its audit process.
Leadership Changes
Carl Cowling resigned as WH Smith's chief executive in November last year after an independent report by Deloitte confirmed the accounting problems, identifying several "shortcomings" in the US audit process.
WH Smith remains under investigation by the Financial Conduct Authority (FCA) over the accounting issue. The scandal led WH Smith to issue a profit warning for the year ending August 2025, with results also delayed.
PwC Response
A PwC spokesperson said: "We will be fully cooperating with the FRC's investigation. The delivery of high-quality audits is fundamental for the firm and we are committed to maintaining high standards."
Remediation Plan
In December, WH Smith informed investors that it had initiated a remediation plan to strengthen governance and controls, ensure process alignment across the group, and implement cultural change through training and monitoring.
Earlier this year, the company hired Leo Quinn, former boss of infrastructure giant Balfour Beatty, as executive chairman to help the group "return to stability" following the debacle. Quinn started on April 7, while interim chief executive Andrew Harrison reverted to his previous role as head of the UK division.
Business Focus
WH Smith is now focused solely on its 1,300 shops in global travel locations, including airports and train stations, after selling its high street chain of about 480 shops to Hobbycraft owner Modella Capital in June last year. As part of the deal, the WH Smith name has disappeared from British high streets, replaced by the brand TGJones.
