The decision by PricewaterhouseCoopers to resign as Wilko’s auditor without giving any warning about the company’s precarious finances was like a ‘doctor turning away a cancer patient’, according to a leading accountancy expert.
The High Street chain and 12,500 jobs might have been saved if PwC had raised the alarm before it quit in 2019, Atul Shah, a professor of accounting and finance at City University, told The Mail on Sunday.
The broadside comes just days after Wilko’s former chairman – and granddaughter of the founder – Lisa Wilkinson was raked over the coals by MPs on the House of Commons Business and Trade Committee. She was questioned over her role in the collapse of the 93-year-old firm earlier this year.
PwC audited Wilko’s accounts until 2019, after which it was replaced by fellow ‘Big Four’ outfit EY. The two firms were called in for scrutiny following criticism that they had not done enough to investigate the company’s finances before it went under.
In the accounts for the year to February 2019, PwC did not challenge the directors’ conclusion that the business had the resources to continue for the foreseeable future.
Time for change?: The role of PwC and EY in the Wilko debacle is likely to rachet up pressure on Ministers to reform the UK’s audit and accounting sector
It added that this ‘was not a guarantee’ because ‘not all future events and conditions can be predicted’.
Shah interpreted this to mean that PwC was aware of potential issues at Wilko. ‘Auditors resigning from a risky client without giving a warning about the financial situation is like a doctor turning away a patient suffering from cancer,’ he said.
Shah, who was among several expert witnesses to give testimony to the committee during the Wilko inquiry last week, said auditing firms were now more concerned with ‘monitoring the risk to their own reputation rather than acting professionally’.
He said: ‘Whether it’s a risky client or non-risky, you do your job.’ PwC declined to comment.
EY was previously lambasted for its oversight of the group after signing off its accounts despite Wilko having warned last year that it did not have enough funds to cope with a sharp drop in sales.
The role of PwC and EY in the Wilko debacle is likely to rachet up pressure on Ministers to reform the UK’s audit and accounting sector and to break the dominance of the ‘Big Four’ firms – PwC, EY, Deloitte and KPMG.
The industry has been under close scrutiny for years since the collapse of outsourcing giant Carillion, which was one of the Government’s biggest contractors.
The company was audited by KPMG in 2018.
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