The Financial Reporting Council (FRC), said it was looking into the audits carried out by the accountancy firm for 2015, 2016, and 2017, as well as the preparation and approval of company financial statements by Chris Marsh, Patisserie’s former finance chief who was arrested on suspicion of fraud shortly after an accounting ‘black hole’ was discovered.
The company was rescued from the brink by its chairman Luke Johnson, who injected £20mln of his own funds into the firm after it revealed it was nearly £10mln in debt, having previously thought it had £28mln in cash as well as a £1mln unpaid tax bill at its trading subsidiary Stonebeach.
Last week, news came that Patisserie’s chief executive Paul May had resigned as the probe began, and was being replaced by turnaround specialist Stephen Francis.
The accountancy regulator said that once the investigation process, which could take up to two years, was complete, it would decide whether to present a case against Grant Thornton and Marsh at a tribunal, which could result in fines or, in the case of individuals, banning them from practising as accountants.
The investigation is the latest in a series of scandals that have rocked the reputation of accountancy firms and auditors this year, with many calling for a reform of the sector.
The FRC is already investigating a member of the ‘Big Four’ accountancy firms, KPMG, over its role as auditor of outsourcer Carillion, which collapsed in January amid a mountain of debt and unfinished public sector contracts.
Patisserie Holdings shares on AIM are currently suspended.