KPMG called in after Worldspreads accounting errors

by Rachael Singh

More from this author

19 Mar 2012

  • Comments
kpmg reception

KPMG ADMINISTRATORS have been appointed to spread betting company Worldspreads, following the discovery of accounting errors which has left a £12m black hole in client accounts.

Jane Moriarty and Samantha Bewick, partners at KPMG, were appointed joint special administrators of Worldspreads, the UK spread betting business and wholly owned subsidiary of Worldspreads, a Dublin incorporated company.

The Financial Service Authority's Special Administrations (SARs), which was introduced last year, are designed to return client money quicker in the collapse of a financial service provider, than regular insolvencies.

Shares of Worldspreads were suspended on Friday after the company told authorities about the discovery of accounting irregularities. Funds from client accounts, which should have been segregated, was mixed with the company's own funds, The Financial Times reports.

Finance director Niall O'Kelly and chief executive Conor Foley left the business earlier this month. The accounting irregularities were discovered by the new chief executive who was inspecting the accounts, chairman Lindsay McNeile said.

It is likely auditors Ernst & Young will come under fire for signing off on annual accounts when the irregularities were taking place.

KPMG's Moriarty said: "The administration follows the discovery of accounting irregularities, which the company became aware of during the course of Friday 16th March 2012.

"It soon became apparent that there was a shortfall in client monies and, in order to mitigate losses for clients, the directors applied to court for the appointment of special administrators."

It is estimated the company has 15,000 clients accounts, however, due to the accounting irregularities it is likely there will be a shortfall in repayments to clients.

Worldspreads currently employs about 66 staff with some likely to be retained by the special administrators to help wind down the business.

The SAR process entails the administrators completing three tasks: making a swift return of client assets; timely engagement with authorities; and to rescue the business as a going concern, or to wind it up in the best interests of the creditors. A regular administration involves the latter, but not the first two objectives.

SARs were brought about to help creditors caught up in complex insolvencies receive their funds quicker. The collapse of investment bank Lehman Brothers at the back end of 2008 saw its administrators tied up in heavy litigation resulting in some creditors waiting years before they received any payment.

Visitor comments

blog comments powered by Disqus

Add your comment

We won't publish your address

By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication

  • Send

Charterhouse Accountants

Finance Officer

Charterhouse Accountants, Beaconsfield, Permanent, Full Time, £ Competitive




Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials


Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you



Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.


iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.