E&Y avoids Farepak inspection
Ernst & Young escaped a full-scale enquiry into its audit of collapsed hamper firm Farepak this week
The Accountancy
Investigation and Discipline Board (AIDB) announced an investigation this
week into events leading up to Farepak’s demise, which left 150,000 customers
short of £40m in hamper savings.
But the body clarified that it was looking at ‘accountants’ rather than
accountancy firms.
‘E
&Y can confirm that neither the firm nor members of the firm have had
any communication from the AIDB on this matter,’ an E&Y spokesman said this
week.
Sources at E&Y have pointed out that inter-company loans, which left
Farepak without the cash to pay its liabilities, would have had no impact on its
audit opinion since the money remained within the group.
The AIDB’s investigation, led by executive counsel Cameron Scott, could focus
on the roles played by William Rollason, chief executive of Farepak’s parent
company European Home Retail and finance director Stevan Fowler, some
speculated. Both are qualified accountants.
The AIDB did not name the accountants whose conduct will be examined, but
confirmed consultations had taken place with the ICAEW and CIMA. The AIDB has
not ruled out the possibility that individuals associated with advisory roles
could also be investigated.
The collapse has been one of the most high-profile corporate disasters of
recent years. Though the sums of money involved were relatively small, thousands
of customers lost savings designed to purchase Christmas hampers.