Newsham facing FRC tribunal over Worthington Nicholls audit

by Richard Crump

More from this author

09 May 2014

  • Comments
Financial Reporting Council

THE FORMER auditor of Worthington Nicholls Group is set to face an FRC disciplinary hearing in connection with the audit of the financial statements of the group and its predecessor businesses.

An independent tribunal hearing into the conduct of Paul Newsham, a former audit partner at Worthington Nicholls auditors Sixonethreeone (the former shell company of Haines Watts), is to commence on 19 May and last around three weeks.

In July, the FRC issued a complaint against both Sixonethreeone and Newsham for their work auditing the financial statements of the former AIM-listed air conditioning business.

The complaint, which related to Newsham's role during the 2004 and 2006 financial years, included allegations of misconduct such as: identifying potential audit issues in the planning process; accounting policies adopted and audit evidence obtained; plus quality control and closure of audit.

Worthington Nicholls was subject to a Serious Fraud Office investigation following allegations that after listing in 2006, a number of announcements were made to the market which were misleading and led investors to buy shares at artificially inflated prices. The investigation was closed in 2012 after the SFO determined it would not secure a conviction.

Former Worthington Nicholls finance director Timothy Hunt was stripped of his licence and excluded from the ICAEW for six years in May 2012 following a FRC investigation and disciplinary hearing.

Hunt was found guilty of producing misleading interim accounts in June 2007, including £770,000 turnover for which there was no evidence. The disciplinary tribunal said that Hunt had failed to stop misleading information given to investors ahead of the share placement of Worthington Nicholls, estimated to be worth £20m.

In 2007, Worthington Nicholls' AIM shares were suspended, and advised shareholders to expect a £6.5m asset write-down. It hired KPMG to conduct a review of its accounting practices.

Its former audit firm Sixonethreeone was formed in 2005, and was a business unit of Haines Watts.

Haines Watts operated under a franchise model until 2005 when it became the LLP firm HWCA. However, in August 2009 HWCA re-established its franchise model, selling the regional firms back to the partners and managers.

The shell company HWCA was renamed Sixonethreeone and entered into Company Voluntary Arrangement (CVA) insolvency process in March 2010.

Visitor comments

blog comments powered by Disqus
display:none

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

Submit
  • Send

Appointments to University Committees

University of Glasgow 120x60University of Glasgow - Glasgow - unremunerated positions

 

 

Newsletters

Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials

Careers

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

Briefings

budget-management

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.

cchcover

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.