KPMG is to be investigated by the Financial Reporting Council for its auditing of Conviviality’s accounts prior to the dramatic collapse of the booze wholesaler earlier this year.
The FRC announced today it had commenced an investigation into KPMG’s audit of Conviviality for the 52 weeks ending 30 April 2017, and a separate probe into the preparation and approval of Conviviality’s financial statements.
A spokeswoman for KPMG said: “We believe we conducted our audit appropriately and will co-operate fully with the investigation.
“As reported by the company, it experienced margin weakness at the start of 2018 and also a significant payment to HMRC which had not been included within its short-term cashflow projections, creating a short-term funding requirement. Our audit of the company’s financial statements for the year ended 30 April 2018 had not yet commenced at the point which administrators were appointed.”
It comes after repeated calls from the likes of MP Frank Field, chairman of the parliamentary Work and Pensions Committee, for KPMG to be held to account in the wake of Conviviality’s disintegration.
Conviviality fell into administration on 5 April, just weeks after announcing a host of accounting errors, including an “arithmetic error” in its forecasting that hit its share price, and the failure to account for a £30m HMRC bill. As the saga unfolded, its CEO Diana Hunter stepped down as the remaining board members scrambled to raise funds for a bailout. However, they were unable to raise the necessary cash in time.
The collapsed group’s wholesale businesses, Matthew Clark and Bibendum, were bought by Magners owner C&C Group, while its retail wing, which included Bargain Booze and Select Convenience, was snapped up by Bestway.
C&C has since unveiled plans to ‘decouple’ Matthew Clark and Bibendum - undoing about 18 months of work by Diana Hunter to merge the two businesses in search of synergies, and reappointed former Bibendum boss Michael Saunders as the wine business’ CEO. Former Matthew Clark CEO Steve Thomson, meanwhile, has returned to the wholesaler as executive chairman. James Lousada, who was joint commercial director of the two businesses under Diana Hunter, has departed.