The Leading News & Information Service For The Facilities, Workplace & Built Environment Community

Friday, 15 November

Interserve's £90m A Year Auditors Under FRC Investigation

Interserve's £90m A Year Auditors Under FRC Investigation

The Financial Reporting Council (FRC) has commenced an investigation into the audit by Grant Thornton of the financial statements of Interserve Plc for the years ended 31 December 2015, 2016 and 2017.

The investigation will be conducted under the Audit Enforcement Procedure.

 

Grant Thornton

Grant Thornton are said to have taken £90 million in fees for its services to Interserve in 2018.

A spokesperson for Grant Thornton UK LLP told ThisWeekinFM: "I can confirm we have received correspondence from the Financial Reporting Council informing us of its decision to commence an investigation. We will of course fully cooperate with them in this matter.”

 

Big four

In the accounting and auditing world, Grant Thornton is considered a rival to the big four of KPMG, Deloitte, Ernst & Young and Price Waterhouse Coopers (PwC.) The company has already been up before the Financial Reporting Council (FRC) on audit misconduct - and fined £3 million for 'massaging' the process in favour of the University of Salford and soft drinks supplier Nichols (whose brands include Sunkist and Vimto).

Meanwhile, as part of its investigation into the collapse of Carillion, the FRC also set a team of investigators on the tail of KPMG and the firm's audit of Carillion in the years 2014 to 2017. Prior to this, the FRC also started a review of two former Carillion Group Finance Directors, Richard Adam and Zafar Khan, in relation to the preparation and approval of the financial statements and financial reporting of Carillion plc for the years ended 31 December 2014, 2015 and 2016 and the six months ended 30 June 2017.

 

Snouts

Ernst & Young was responsible for the almost instant pre-pack that allowed Interserve Plc to fold whilst its Group assets - the businesses - were transferred to ownership of lenders. This left Plc shareholders with nothing.

PwC has been criticised for the amount of money it took in fees from what was left of Carillion after its collapse.  PwC took thousands of pounds a day for the services of the administrators it allocated to the job of selling off Carillion contracts for peanuts.

Each of the big four had their snouts in the Carillion debacle - earning an estimated £40 million in 2017 alone as the company commenced what was to become a spectacular decline.

The FRC is also still looking at Deloitte’s audit of Mitie in 2017.

 

Dismantle the four

There have been repeated calls in Parliament to actually dismantle the big four while the  Competition & Markets Authority has been looking into what many see as a cartel.

 

The Financial Reporting Council

The FRC could also see itself rebranded as the  Audit, Reporting and Governance Authority - supposedly with more teeth and an ability to move faster than a glacier.

The FRC’s current mission is said to promote transparency and integrity in business and set UK standards for accounting and actuarial work. As the regulator for the sector, the FRC monitors and takes action to promote the quality of corporate reporting; and operates independent enforcement arrangements for accountants and actuaries - primarily working in companies with a turnover of £200 million or greater.

 

The Audit Enforcement Procedures are:

  • Initial case examination and decision to investigate.

  • Investigation.

  • Decision by Executive Counsel as to whether to issue a Decision Notice (a notice with the findings and recommended sanction).

  • Referral to Enforcement Committee and decision by the Enforcement Committee whether to issue a Decision Notice.

  • Referral to a Tribunal.

Picture: The Financial Reporting Council has commenced an investigation into Interserve's auditors.

Article written by Brian Shillibeer

Share



Related Articles

The Hussle - Carillion's Accounting Tricks Revealed

Carillion's accounting tricks and those who were culpable in allowing them have been revealed. Peer review Royal Liverpool Hospital - Peer review is a check and...

 Read Full Article
Kier Komes Krashing Down

The Kier Group's shares have been plummeting in a style reminiscent of Carillion and Interserve - and on Monday June 17 things got worse as the construction and FM...

 Read Full Article
Interserve Reaction - Firm Given £Millions In Public Contracts Despite Nationalisation Plan

Interserve was handed £233 million worth of public sector contracts in recent months despite being on a government 'watch list' set-up to avoid...

 Read Full Article
Interserve To Rise Like A Phoenix From Ashes Of Fire Sale?

Administrators were appointed to Interserve Plc on Friday March 15 - within minutes, the entire Group's business and assets were sold to a newly incorporated company...

 Read Full Article
Comedy Of Kier's Colossal Mis-Calculation

Monday March 11 saw the Kier Group with red faces over an accounting 'error' that added over £50 million of debt to the outsourcer's trading statement...

 Read Full Article
Full Of Methane - Carillion And ENGIE In The News As Sodexo and ISS See Stars

More of Carillion's accounts are to be audited for bulldoings while ENGIE is going big into methane in France. ISS, for global outsourcing and Sodexo for its prisons,...

 Read Full Article
Interserve Shareholders Left With Almost Nothing After Rescue Plan Agreed

Interserve's latest plan to fend off creditors and ultimately a Carillion style collapse have been agreed in principle with all of the company's lenders, bonding...

 Read Full Article
Not Quite Out for The Count - Interserve Off The Canvas...Just!

Global FM and building firm, Interserve, saw its share value plummet yet again on the morning of December 10. Having fallen to 6p (from a 2014 position at 700p), they...

 Read Full Article
Interserve - Basic Failings In Basic Maintenance. Troubled Firm Hit With Huge Bio Hazard Fine

Emergency generators failed and one caught fire when they were called in to use. Interserve has been fined after multiple safety failings could have caused a serious bio...

 Read Full Article
Greed On Stilts - Snouts In Carillion Trough Condemned By Parliament

A Parliamentary Committee has described the acts of former Carillion directors as 'greed on stilts', condemned 6.4m in payouts to advisors days before the company...

 Read Full Article