Investor Event

Blancco Campaign Update #4

This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

Campaign members will recall that the restatements of the Blancco accounts for year ending June 2016 and other accounting corrections led to a loss of over £135 million in shareholder value. The previous CEO exercised Stock Appreciation Rights prior to the disclosure of these restatements. ShareSoc referred these issues to the Financial Conduct Authority in January 2018 and, as far as the audit by KPMG was concerned to the Institute of Chartered Accountants for England & Wales (ICAEW) in February 2018.

ICAEW has at last issued its judgement – in April 2020, though they only advised us of it last week:

” KPMG LLP of London, United Kingdom

Consent order made on 2 April 2020

With the agreement of KPMG LLP of London, United Kingdom the Investigation Committee made an order that it be Reprimanded, fined £3,500 and pay costs of £2,743 in respect of the complaint that:

On 30 September 2016, KPMG LLP issued an audit report on the financial statements of “A” plc for the year ended 30 June 2016 which stated that the audit had been conducted in accordance with International Standards on Auditing (UK and Ireland) when the audit was not conducted in accordance with International Standard on Auditing (UK and Ireland)
230 ’Audit documentation’ in that the firm failed to prepare audit documentation that is sufficient to enable an experienced auditor, having no previous connection with the audit, to understand the results of the audit procedures performed, and the audit evidence obtained in respect of certain deferred income.”

ShareSoc and UKSA jointly have written back to ICAEW registering strong criticism of a) the time taken to reach a decision, b) the derisory level of the fine relative to the damage caused, c) the scant information on the investigation and findings and d) the lack of transparency of the report which is buried among many other decisions with Blancco’s name anonymised. ICAEW has responded with a dead bat, saying that the investigation and reporting have respected their established procedures. ShareSoc directors plan to follow up this issue with senior ICAEW executives.

Separately, there has been no information from the FCA. We have followed up our initial referral of 2 1/2 years ago with letters to the FCA Chairman in October 2018 and November 2019 and we will send a further letter now. We are hopeful that they will eventually take decisive action, as they did in the Redcentric case where certain shareholders were partially compensated and three executives face prosecution.

Go here to learn about our campaign.

Bruce Noble
Blancco Campaign Co-ordinator

  1. Michael Darbyshire says:

    I read the result of the investigation into KPMG with a certain lack of surprise. I was a member of ICAEW, having in my later years served on committees concerned with European relationships.
    I was so disgusted with the absence of disciplinary proceedings against members in Goldman Sachs and what is now known as PWC – and others, who failed to deal with Robert Maxwell, that I resigned my membership. I believe that Maxwell’s behaviour in the 1960’s in charge of Pergamon Press had signalled clearly what sort of person he was, and the enquiry clearly signalled that he was unfit to be running a public company, yet members failed to exercise any discretion in their dealings with him – indeed it could be said they helped him in his subsequent misfeasance.
    Plus ca change….!

    Mike Darbyshire

  2. rogerwlawson says:

    Just shows that major reform of the regulatory system for audits is required. Allowing a professional body to regulate its own members is just daft. The stock exchange dropped that long ago of course.

  3. Mark Bentley says:

    …particularly when the president of the professional body happens to be a partner in KPMG.

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