FRC to probe Grant Thornton's Globo audits
Grant Thornton replaced BDO as Globo auditors after BDO resigned in February 2014
THE FINANCIAL Reporting Council (FRC) has launched an investigation into Grant Thornton’s audit of British mobile technology firm Globo.
The probe will centre on the consolidated financial statements for the years ended 31 December 2013 and 31 December 2014.
In October, Globo announced that its chief executive and chief financial officer had resigned after they revealed a number of financial irregularities at the company.
AIM-listed Globo said CEO Konstantinos Papadimitrakopoulos and CFO Dimitris Gryparis had highlighted to its directors “certain matters regarding the falsification of data and misrepresentation of the company’s financial situation.”
Trading in Globo’s shares were suspended that same week at the company’s own request after its share price lost almost a third in value.
A damning report by US-based Quintessential Capital Management (QCM) hinted that Globo’s revenue stream was primarily derived by fictional sales through sham companies it had created.
Globo duly alerted the FCA, the Serious Fraud Office and the City of London police to its predicament.
A spokesman for Grant Thornton, which was paid £280,000 for the audit services in 2014, said: “We acknowledge the FRC’s announcement that it has launched an investigation into our audits of Globo plc. Administrators have been appointed over the company by court order and are seeking to establish what has happened to the business.
“We await the outcome of their inquiries. Maintaining the highest level of quality is at the heart of Grant Thornton’s agenda. As a member of the accountancy profession, we also have the benefit of regulators who regularly review our audits and we shall continue to work actively with the FRC.”
Grant Thornton replaced BDO as Globo auditors after BDO resigned in February 2014.