Accounting and Audit

Black Hole in Patisserie Holdings, Audit Reviews, Telford Homes and Brexit

Let’s take the really bad news first. AIM listed Patisserie Holdings (CAKE) shares have been suspended following an announcement of “potentially fraudulent accounting irregularities” which will significantly impact the company’s cash position. The CFO, Chris Marsh, has been suspended. Media reports suggest there may be shortfall of as much as £20 million. The auditors are Grant Thornton which won’t improve their reputation much but as the company’s year end is September they may not yet have looked at last year’s results. According ...

8pm Tuesday, 7 August, the BBC Radio 4 documentary ‘The Equity Release Trap’.

Make a date in your diary for 8pm Tuesday, 7 August, for the BBC Radio 4 documentary ‘The Equity Release Trap’. The documentary investigates the claims of Professor Kevin Dowd, professor of finance and economics at the University of Durham, that the equity release sector has been seriously under-valuing embedded guarantees, and that the regulator, the Prudential Regulation Authority, has only made half-hearted attempts to address these under-valuations while permitting them anyway. The implications for some of the firms involved could ...

Lax Regulation (Globo, GRG) and Japanese Trust AGM

Globo was one of those AIM companies that turned out to be a complete fraud. Back in December 2015 the Financial Reporting Council (FRC) announced an investigation into the audits of the company by Grant Thornton (GT). Even the cash reported on the balance sheet in the consolidated accounts of the parent company proved to be non-existent (or had been stolen perhaps). I have previously complained about the slow progress and the lack of any information on this investigation. But former shareholders ... Read more

Open Season on Auditors?

I attended a joint ShareSoc/UKSA meeting hosted by PwC yesterday. There was a lively debate as one might expect of the problems of the audit profession where there have been just too many issues with listed company accounts in recent years. The latest is an investigation announced by the FRC into the audit of Conviviality but there have been lots of other problem cases in both large and small companies – Carillion, Interserve, BHS, BT, Rolls-Royce, Mitie, RSM Tenon, Connaught, Autonomy, ...