KPMG could be investigated over Conviviality collapse

575
KPMG

KPMG could face investigation by the Financial Reporting Council (FRC) over its role in the collapse of Conviviality.

According to The Telegraph KPMG, which has acted as the alcohol retailer’s auditor since 2015, could face questioning from the FRC which is understood to be “looking closely” at the company.

Conviviality’s collapse was largely due to two separate errors in its accounting which caused its shareholders to lose confidence in the company.

The first came on March 8 when conviviality revealed its profits would come in 20 per cent lower than previously reported due to an accounting error.

This sent share prices plummeting from 301p per share to 123p per share in less than 24 hours and wiped £300 million of the company’s value.

The second major blow came just days after on March 14 when conviviality revealed that it had forgotten to include a £30 million tax bill in its financial report.

If a formal investigation was to be launched into KPMG, the FRC retains the right issue a fine if it finds any evidence of misconduct, or that its practices were of substandard quality.

After these embarrassing mistakes conviviality failed to find a buyer and subsequently appointed administrators.

Magners Cider owner C&C bought its Matthew Clarke and Bibendum wholesale operations, while Bestway purchased Wine Rack and Bargain booze for £7.5 million.

Click here to sign up to Retail Gazette‘s free daily email newsletter