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Patisserie Holdings PLC Updates
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The accounting firm Grant Thornton has been fined over £ 2.3million for numerous misconduct and a “serious lack of competence” in its audits of the Patisserie Valerie coffeehouse chain, which collapsed in January 2019 amid allegations of fraud.
The Financial Reporting Council also fined David Newstead, who led Grant Thornton’s audit, £ 87,750 and banned him from performing statutory audits for three years.
The fines, which relate to Grant Thornton’s irreproachable audit opinions on Patisserie Valerie’s accounts for the years ended 2015, 2016 and 2017, have been reduced by £ 4million and £ 150,000 to reflect the cooperation of cabinet and Newstead respectively, and their admissions of chess.
Patisserie Valerie was audited by Grant Thornton from 2007 and took office in January 2019, about three months after it said its board of directors had been made aware of potentially fraudulent accounting irregularities. The collapse resulted in the closure of 70 stores and more than 900 job cuts.
Claudia Mortimore, deputy executive advisor to the FRC, said the findings showed “a serious lack of competence in the conduct of the audit work”.
“Patisserie Holdings Plc’s revenue and cash audit in particular involved missed red flags, failure to obtain sufficient audit evidence, and a lack of hindsight and questioning of information provided by management. “she said.
In addition to a fine, the FRC ordered Grant Thornton to review the culture of challenge in his audit practice and report to the watchdog annually for three years on the progress of his actions to improve quality. of its audit.
Grant Thornton and Newstead were severely reprimanded by the regulator.
“We regret that the quality of our work did not live up to what was expected of us in this case,” Grant Thornton said, adding that he had fully cooperated with the FRC.
“Since the reporting period, we have invested heavily in our audit practices to better ensure consistent quality and have started to see significant results from this investment, as most recently evidenced by our latest [audit quality review] scores.
Grant Thornton said he would continue to defend a £ 200million negligence claim brought against him by the liquidators of Patisserie Valerie, who he said “ignores board and management failures in the detection of the sustained and collusive fraud that has taken place “.
“We recognize that there were gaps in our audit work; however, our work did not cause the business to fail, ”he said.
Newstead declined to comment.
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