Core Points - The UK Financial Reporting Council (FRC) is considering a formal investigation into PwC's audit work for WHSmith due to accounting errors identified in the retailer's US operations [1][2] - WHSmith has relied on PwC as its auditor since 2015, and Deloitte's independent review found that revenues were overstated across multiple years [1][3] - Following the disclosure of these errors, WHSmith's market value decreased by nearly £600 million, and the group chief executive Carl Cowling stepped down [3] Investigation Details - The errors were raised by a finance team member in August, leading PwC to refer WHSmith's public announcement to the FRC [2] - A final decision on whether to proceed with a formal inquiry into PwC's audits has not yet been made [2] Audit Findings - Deloitte's review indicated that a target-driven performance culture in North America and limited oversight of finance processes contributed to the accounting issues [4] - Deloitte found that income was recorded prematurely when agreements were made, rather than spreading recognition over time, resulting in inflated profits [5] Financial Impact - Deloitte determined that the accounting issues would have a greater impact on reported profits than previously expected, prompting WHSmith to restate its full-year 2023 and 2024 earnings [6] - The trading profit forecast for WHSmith's US business was revised downwards to £5 million–£15 million for 2025, compared to £25 million announced in August [6]