Auditor faces FRC probe after Patisserie Valerie’s near-collapse

The Financial Reporting Council (FRC) said it would examine Grant Thornton’s handling of Patisserie Holdings’ accounts over three of the high street chain’s financial years ending 30 September 2015 to 2017 under its audit enforcement procedure.

The regulator added that it would also look in to the “preparation and approval” of Patisserie Holdings’ financial statements and other information by former chief financial officer Chris Marsh.

He was suspended by the company in October and later resigned after Patisserie Holdings alerted the market to a multi-million pound black hole in its finances.

Mr Marsh was also arrested as part of a fraud inquiry but later released.

The company’s chairman Luke Johnson told investors this month that without his offer of £20m in emergency loans, Patisserie Holdings was three hours from bankruptcy at the height of its crisis.

Just a week ago, its chief executive of 12 years Paul May quit to be immediately replaced by a turnaround specialist.

The FRC’s inquiry follows stinging criticism of auditors – and regulators such as the FRC – in the wake of the collapse of Carillion in January this year.

While a report by MPs said primary responsibility for the construction and outsourcing specialist’s demise should lie with its board, it also identified failures by those who were supposed to provide shareholders with trust in Carillion’s true financial position.

The so-called ‘big four – KPMG, EY, PwC and Deloitte – are currently the subject of an inquiry by the Competition and Markets Authority.

Grant Thornton had already been feeling the heat over Patisserie Holdings’ financial woes.

Just days after the accounting black hole was announced, Grant Thornton’s chief executive confirmed she was to quit.

Sacha Romanovitch had been facing an internal revolt against her leadership and decided not to seek a second term at the helm under the partnership’s rules.

2018-11-21T10:54:26+00:00By |

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