If you have been watching Pound Shop Wars on television over the past few weeks then you may be interested in the following.
KPMG resigned as auditors of Poundworld Retail Ltd, the main chain of stores featured in the programme, on 30th December 2013 following completion of the audit for the year ended 31st March 2013. Their role as auditor was taken over by PwC.
When an auditor resigns they are required to report their reasons to Companies House. In that report KPMG stated:
‘The year-end stocktake results provided to us by the company were misleading in that they were subsequently found by us to have been materially adjusted to include additional entries which increased the value of stock above the value initially presented to the company by the third party stocktaking company which carried out the stocktake.’
KPMG said that the adjustment to the amount and value of stock was not disclosed or explained to them when the results of the stocktake were initially presented, and their subsequent discovery caused them to have ‘significant concerns’ about conduct and governance relating to presentation of the stocktake results.
KPMG senior auditor, Chris Hearld, signed off the accounts but qualified them stating: ‘For virtually all stores not visited by us as part of our audit procedures, the statements of stocktaking and the statements of stock at the end of the financial year derived from them that were presented for our audit contained additional entries which were not in accordance with what had been recorded during the physical checking of stock. Whilst these additional entries were subsequently corrected in the financial statements, in our opinion the accounting records kept by the company in relation to its year-end stock position were not adequate.”
In its statement on the matter KPMG said: ‘While we were able to complete our audit notwithstanding those concerns, in the light of the deterioration in the relationship between us and the company’s senior management which has been caused by these issues, we consider that the appropriate course is to resign as auditors.’
Looks like someone has been a naughty boy!