FRC to probe Grant Thornton’s AssetCo audit work

by Naomi Rainey

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12 Aug 2014

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Fire engine

THE FRC is to probe Grant Thornton's audit of AssetCo's accounts for the three years to 2010.

The investigation comes as the Grant Thornton faces a £50.8m legal claim from the AIM-listed company, which previously provided and maintained London and Lincolnshire's fire engine equipment.

Beleaguered support services business Assetco was forced to adjust its 2010 accounts, which were audited by Grant Thornton, to reflect a gap of more than £235m in its balance sheet.

In a statement, the FRC confirmed it has launched an inquiry under the accountancy scheme in regards to Grant Thornton's preparation and approval of AssetCo's accounts for the years ending 31 March 2008 to 31 March 2010.

The decision to investigate "was made following matters referred to the FRC by a third party", the body added.

A spokesperson for Grant Thornton confirmed it had been informed of the investigation and it will "fully cooperate in this matter".

AssetCo was forced to sell its UK business for just £2 in 2012 following shareholder backlash over losses. The business secured refinancing and restructured to focus on its operations in United Arab Emirates.

The company did not publish its annual report for the 18 months to 30 September 2011 until April 2012, resulting in a temporary suspension of trading. It launched an investigation into its 2009 and 2010 accounts due to a "significant overstatement of profits and assets". More than £235m was wiped from its balance sheet as a result of prior period adjustments.

Grant Thornton resigned as auditors in 2011 to be replaced by PwC, while AssetCo's board of directors also stepped down as a condition of its refinancing agreements. Its performance has since improved following the business' overhaul.

In its half-year financial report, dated 30 June 2014, AssetCo chairman Tudor Davies confirmed a £50.8m claim against Grant Thornton for its "negligent audits" of the group's 2009 and 2010 accounts was ongoing.

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