BDO says it dealt with XL issues

BDO Stoy Hayward, the auditor of XL Leisure Group, has said it dealt promptly with accounting irregularities at the collapsed travel company after the resignation of the previous auditor KPMG in late 2006.

KPMG resigned in October 2006 over irregularities relating to a delayed supplier payment.

In a statement earlier this week BDO said: ‘Any client BDO Stoy Hayward takes on undergoes a rigorous client acceptance process. As part of our professional clearance procedures, we met with KPMG to understand their reasons for resigning as auditors to XL Leisure Group and the nature of the financial irregularities that subsequently came to light on the 2005 financial statements on which they reported.

‘Prior to accepting appointment we stipulated to the company that in order to address these concerns we would need to undertake significant additional investigatory procedures as part of our audit of the 2006 financial statements. As a result, the 2006 financial statements recorded significant restatements of the comparative financial information.’

The irregularities at XL ­ which collapsed last week, leaving tens of thousands of passengers stranded abroad - were caused by some of its staff at XL delaying the payment of invoices to airline catering company Alpha Airports.

The delay flattered XL’s figures ahead of a flotation of its then parent company, Avion, on the Icelandic stock exchange.

After an initial investigation into the irregularities KPMG still had concerns over the accounts but felt it had been ignored. ‘In the light of the above concerns we have resigned as auditors with immediate effect,’ KPMG said in its resignation letter.

Attempts to find a buyer for XL were continuing this week. Administrator Kroll declined to comment on possible buyers for XL, which blamed rising fuel prices for going bust. Around 1,500 of XL’s 1,700 staff have been made redundant.

Last week the chief executive of British Airways Willie Walsh warned that up to 30 airlines will go bust before Christmas.