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KPMG faces probe over failed Bargain Booze owner

KPMG is to face an investigation into its audit of Conviviality, the company behind the Bargain Booze and Wine Rack chains, which collapsed in the spring.

The Financial Reporting Council (FRC) said it was to focus on the company’s final set of full-year results covering the 52 weeks to 30 April 2017.

It fell into administration just under a year later after tough trading contributed to a string of profit warnings and it failed to raise £125m to fill a black hole caused by a “material error” in its forecasts.
The majority of the 2,600 people it employed have kept their jobs after the company’s wholesale arm was bought by the owner of Magners under a so-called pre-pack administration.
The retail business was bought by Bestway.
The probe is a further headache for KPMG, coming less than a month after the FRC fined it £4.5m for its work on the accounts of insurance firm Quindell, since renamed Watchstone.

It also comes at a time of pressure on the so-called ‘big four’ accountancy firms – and the FRC – over the demise of construction firm Carillion in January.
A KPMG spokesman said of its work for Conviviality: “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 cash flow projections, creating a short-term fundingrequirement.

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“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.”
The FRC said on Tuesday it was also investigating a member of the Institute of Chartered Accountants in England and Wales (ICAEW) over the preparation and approval of Conviviality’s financial statements.

Source: Sky

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My name is Joel Bissitt. I have been an entrepreneur for 24 years and have run many small businesses across various sectors. For the last 10 years I have worked mainly within online media, franchising and small business start-ups.

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