FRC probes KPMG and PwC’s Eddie Stobart audits
The accounting watchdog has opened investigations into audits by KPMG and PwC of haulage firm Eddie Stobart Logistics.
In August, Eddie Stobart sacked its chief executive and suspended trading in its shares after an accounting investigation found its 2018 profits had been overstated by £2m.
A review of the company’s accounts, undertaken by finance chief Anoop King, found that 2018 operating profits had been overstated by around four per cent.
The logistics firm nearly fell into administration before striking a rescue package with shareholder Douglas Bay Capital Fund in December. The deal left Dbay with a 49 per cent increase in Eddie Stobart.
In a statement to the stock market, Eddie Stobart had said shareholders had voted “overwhelmingly” in favour of the bailout.
In a statement, the Financial Reporting Council (FRC) said it had “commenced two investigations into the audits of Eddie Stobart Logistics plc for the years ended 30 November 2017 (KPMG) and 30 November 2018 (PwC).”
The investigation will be conducted by the FRC’s enforcement division under the Audit Enforcement Procedure.
It is not the first time the Big Four have come under scrutiny by regulators. Earlier this year, the Serious Fraud Office (SFO) was reportedly examining allegations that Lloyds and KPMG drove property group, the Angel Group, into administration by saddling it with fees.
KPMG rejected the allegations at the time and said they consider them to be “unfounded and without basis”.
Eddie Stobart Logistics, known for its green and red trucks, took a £169m charge in its half-year results published in February.
Shares in the haulage firm rose 3.03 per cent this morning.