Audit

FRC to investigate KPMG and PwC over audits of Eddie Stobart Logistics       

The Financial Reporting Council (FRC) has 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 investigations will be conducted by the FRC’s Enforcement Division under the Audit Enforcement Procedure.

Last year the transport group suspended trading following a review which found a £2m “accounting issue”.

In July 2019 the company announced in its trading update that following the appointment of its CFO, Anoop Kang on 1 April 2019, a review carried out into the group’s prior year financial statements found “matters which will be addressed by means of a Prior Year Adjustment”.

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As part of the review carried out in conjunction with the group’s auditors, the board said it would apply a more “prudent approach” to revenue recognition, “re-assessing” the recoverability of certain receivables, as well as considering the appropriateness of certain provisions.

A statement issued at the time by Eddie Stobart read: “Pending clarification of the impact of these items, the Group has applied to suspend trading of the company’s ordinary shares on AIM, which will be effective from 7.30 a.m. today (23 August).

“The group previously announced that the company would release its interim results for the six months to 31 May 2019 on 29 August 2019.”

It continued: “However,the ongoing review will result in a delay to the publication of the Group’s interim results,and it is now anticipated that the group will release its interim results in early September.

“The board has full confidence in the ability of Eddie Stobart’s management team to deliver an improved performance for the group going forward, and remains confident in the strength of the underlying business.”

A spokesperson for PwC told Accountancy Today: “We will cooperate fully with the FRC in this investigation. We are committed to delivering consistently high quality audits and in June 2019 we introduced a major ongoing programme to enhance audit quality across the firm.”

KPMG has been contacted for comment.

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