The Financial Reporting Council (FRC) has launched its investigation into two Big Four audits of logistics and transport company Eddie Stobart. The investigation includes KPMG’s audit for the year ending November 30, 2017, and PwC’s audit for the year ending 30 November 2018. Both investigations will be run under the FRC’s Audit Enforcement Procedure. The FRC reported that while coronavirus has not interrupted its enforcement work, it will not comment on ongoing investigations.
“We will co-operate fully with the FRC in this investigation,” a PwC spokesperson said via email, adding that the firm introduced new audit quality programmes last year. Similarly, a KPMG spokesperson said: “We will co-operate fully with the FRC to conclude this matter as quickly as possible.” Eddie Stobart’s shares were suspended from August 2019 to February 2020, after a £2m accounting-based error was found in its 2018 accounts by then-finance chief Anoop Kang.
KPMG resigned as the company’s auditor in 2018, citing difficulties in the 2017 auditing process. The accounts were then passed on to PwC, who signed off on the 2018 full-year accounts.
Eddie Stobart’s interim reports, released in February, showed several write downs, revenue and profit restatements, and an overall asset value reduction of £169m. The company had been in financial difficulty for several years, and received a £55m bailout in December from private equity group Dbay in exchange for a 51 percent stake in an Eddie Stobart subsidiary.
AccountancyAge
