Marketing

Grant Thornton sued for £200m over Patisserie Valerie audits


The liquidators of Patisserie Valerie are suing Grant Thornton in Britain for £200 million (€221 million) over alleged negligence in its audits of the cafe chain that collapsed following a suspected significant accounting fraud.

The lawsuit is set to be one of the largest brought against a mid-tier accounting firm in the London courts and would be a serious blow to Grant Thornton, the UK’s sixth-largest accountant. The firm audited Patisserie Valerie for 12 years but failed to spot an alleged manipulation of its books.

Grant Thornton’s audits of Patisserie Valerie over the three years before the collapse are also under investigation by regulators at the Financial Reporting Council (FRC).

“The liquidators… have been advised that Grant Thornton were negligent in the preparation and conduct of the 2014 to 2017 financial statements,” said FRP Advisory, which is liquidating the bakery chain, in a report to creditors. It said it had engaged lawyers at Mishcon de Reya to sue the audit group for damages of about £200 million.

FRP said “large accounting misstatements” resulted in Patisserie Valerie’s board “being unaware that the group has insufficient funds to continue to trade”.

Grant Thornton said: “We will rigorously defend the claim. Patisserie Valerie is a case that involves sustained and collusive fraud, including widespread deception of the auditors. The claim ignores the board’s and management’s own failings.

“As the matter is subject to an ongoing FRC investigation and civil claim, we are unable to comment further.”

The large claim is the most recent against an accounting firm for alleged negligence following years of scrutiny of the quality of auditing in Britain. In May, the liquidators of outsourcing group Carillion signalled they would begin a £250 million lawsuit against Big Four auditor KPMG. No such claim has yet been filed at court.

READ  2018 Saw Connected TV Prove Its Worth, but There Are Still Ways Data Can Improve It

Patisserie Valerie was put into administration in January 2019 after the discovery of “significant and potentially fraudulent accounting irregularities”, which revealed the business had overstated its financial position by £94 million. – Copyright The Financial Times Limited 2021



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.