UK Watchdog Investigates Grant Thornton's Patisserie Valerie Audit
Britain's accounting watchdog is investigating Grant Thornton UK's audit of café chain owner Patisserie's financial statements for 2015-2017, the latest evidence of increased scrutiny of the country's leading auditors.
The Financial Reporting Council (FRC) said this week that it was also investigating the preparation and approval of Patisserie's financial statements and other financial information by the company's former chief financial officer Christopher Marsh.
Grant Thornton handles the accounts of Patisserie which has been rocked by an accounting scandal and came close to collapse before getting a £20 million lifeline from chairman Luke Johnson.
"I can confirm we have received a letter from the Financial Reporting Council informing us of its decision to commence an investigation and we will, of course, fully cooperate in this matter," a spokesman for Grant Thornton UK said.
The FRC told Reuters these investigations, which could last up to two years, could lead to outcomes including a tribunal hearing, a fine or even sanctions being imposed by the FRC.
Patisserie has been under pressure since an accounting black hole was discovered and reports emerged that former Chief Executive Paul May and Marsh had been issued twice the number of shares it had disclosed in official filings, forcing May and suspended CFO Marsh to step down.
The FRC, which oversees accounting in Britain, had been looking into the Patisseriecase.
Big Four Auditors
Patisserie, which owns the Patisserie Valerie chain, declined to comment, while Marsh did not reply to a LinkedIn message from Reuters seeking comment on the investigation.
Britain's Serious Fraud Office also opened a criminal investigation into an unidentified individual in October, after Patisserie said it had discovered the accounting fraud.
Grant Thornton, which appointed a new UK CEO elect this week, was recently fined £4 million by the FRC after four of its senior employees admitted misconduct in handling the financial audits of Nichols Plc and the University of Salford.
Britain's Big Four accounting firms Deloitte, PwC, EY and KPMG have all caught the attention of the FRC after the collapse of large British companies such as Carillion and Poundworld raised questions over standards in the auditing industry.
Britain's parliament is slated to start an inquiry into auditing in January to ensure that two pending reviews will lead to actual reform of a "broken" sector.
Britain's Competition and Markets Authority (CMA) launched a fast-track review of the audit sector in October. The FRC itself is the subject of a review to see whether it needs more powers to punish auditors.