KPMG and PwC face investigation over Eddie Stobart audits<\/p>\n<\/p>\n
The accounting watchdog announced on Tuesday a\u00a0review <\/a>into KPMG\u2019s audits of Eddie Stobart Logistics plc from 30 November 2017 and PwC\u2019s subsequent audit on 30 November 2018.<\/p>\n FRC confirmed that the investigations will be conducted by its Enforcement Division under the Audit Enforcement Procedure.<\/p>\n The iconic brand averted permanently putting on its brakes last August when shares were suspended after PwC and then CFO Anoop King unearthed a \u00a32m error in its 2018 accounts. The accounting errors and in-fighting scuffles also led to the CEO Alex Laffey stepping down<\/a>.<\/p>\n Problems further accelerated when the haulier\u2019s value fell to less than \u00a3270m.<\/p>\n PwC took on audits in 2018 after the\u00a0company\u2019s previous accountants KPMG resigned due to \u201cdifficulties in obtaining sufficient appropriate audit evidence\u201d.<\/p>\n However, the issues that emerged in the PwC audit were\u00a0not in the 2017 audit report, and KPMG signed off the paperwork saying that Eddie Stobart was in excellent health.<\/p>\n PwC\u2019s tenure, though, also had problems when it was accused of \u201cdithering\u201d by a shareholder over the delayed 2019 interim results, according to the FT (behind a paywall<\/a>).<\/p>\n The haulage company was saved from administration in December by private equity company Douglas Bay Capital<\/a>, but it ended up being the end of the road for chief executive Alex Laffey, who resigned on the postponement of the interim accounts.<\/p>\n The rescue deal may have saved the trucking company, but further gloom struck in February this year when interim results divulged a number of writedowns, a restatement of revenues and profits and an asset reduction of \u00a3169m.<\/p>\n When Ian Smith, the finance director of accounts payable software Invu, spoke to AccountingWEB last year, pinpointed the company\u2019s issues coming from its attempt to rapidly expand.<\/p>\n \u201cThe business has expanded rapidly in recent years taking on debt to part-fund acquisitions,\u201d said Smith. \u201cThe year-end November 2018 accounts show net debt increasing by \u00a350m to \u00a3160m while shareholders\u2019 funds in the parent company increased by \u00a35m. At the same time, intangible assets and goodwill increased by \u00a340m.\u201d<\/p>\n The investigation of PwC and KPMG over the Eddie Stobart audits puts the Big Four in the spotlight again and adds to an already long list of accounting scandals such as Sports Direct<\/a>, Carillion<\/a> and Ted Baker<\/a> to name a few.<\/p>\n KPMG has already been on the receiving end of a\u00a0\u00a3700,000 fine and a reprimand from the FRC<\/a> this year. Back in April, the accounting watchdog scrutinised the Big Four firm for lacking professional scepticism in the audit of an unnamed company.<\/p>\n UK’s auditing regulator, the Financial Reporting Council, investigates 2017 & 2018 audits of Eddie Stobart Logistics delivered by KPMG and PwC.Bumpy road for Eddie Stobart\u00a0<\/h3>\n
Big Four audits back in the headlines\u00a0<\/h3>\n
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Auditing is one of the biggest frauds. Firms deliver dud audits, charge mega bucks, no public accountability.https:\/\/t.co\/ld1UH5C9Zw<\/a><\/p>\n