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PIC reveals concern over Lewis auditor

7 Apr 2016

The Public Investment Corporation (PIC) voted against the reappointment of PwC as furniture retailer Lewis's external auditors at last year's annual general meeting and questioned the firm's expertise.

The PIC, which is one of Lewis’s largest shareholders with a 9.4% stake, said in a recently released report that it queried PwC’s "ability to respond to the allegations against Lewis Group’s accounting policies". The PIC also questioned the skills of Lewis’s audit committee members "in light of the recent allegations against Lewis Group’s accounting policies".

Clark Gardner of Summit Financial Partners, who raised concerns at the annual general meeting about Lewis’s accounting policies, welcomed the PIC’s comments.

"It’s important auditors are put under pressure to ensure appropriate standards are maintained," he said.

Sanchia Temkin, head of media relations at PwC, said PwC was unable to comment "as we are bound by the rules of confidentiality governing the auditing and accounting profession". Lewis CEO Johan Enslin said management could not comment on the PIC’s voting decision.

The PIC’s damning comment is the latest in what has been a torrid year for Lewis and its external auditors. The share price has slumped from almost R100 to R47.50 as tough economic conditions and a tightening of regulations governing unsecured credit sales hammered turnover and profit. More damaging has been the attack on Lewis’s selling practices and accounting policies launched by Summit Financial Partners and taken up by the National Credit Regulator.

At the annual meeting last August, David Woollam of Summit Financial Partners had a heated argument with chairman David Nurek about the group’s accounting policies and the way in which Lewis accounted for insurance income that provided a substantial boost to earnings.

Nurek defended the group’s policies, saying Lewis’s accounting policies were in line with appropriate accounting standards. A PwC representative at the meeting confirmed Lewis’s accounting policies were in line with international standards.

The PIC was not the only shareholder with concerns about reappointing PwC; 23% of the 64% of shareholders at the annual meeting voted against PwC.

Source: Business Day

Source: I-Net Bridge

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