PW takes over as Wickes auditor

Price Waterhouse is to take over from Arthur Andersen as auditors to beleaguered DIY retailer Wickes.

Andersens resigned the audit last week. A formal resolution to appoint PW will be put to the shareholders at an egm to approve refinancing the business.

PW and solicitors Linklaters & Paines have spent the last three months on a major investigation into supplier contracts which resulted in Wickes’ profits being overstated by over #50m in recent years. The investigation, believed to have cost almost #5m, is still continuing, though a report has already been submitted to the board.

Last year, Andersens earned #260,000 in audit fees from the company, plus another #436,000 in non-audit work, principally related to two major disposals made by the company.

Wickes is withdrawing its 1995 accounts and will refile them once the figures for last year and 1994 have been restated. Andersens will be auditing the revised figures. Finance director Bill Hoskins, who joined the group in the middle of August, said that Andersens would be billing for this work, ‘but it will probably be quite a small invoice’.

Wickes’ shares will remain suspended until next January, when a rights issue worth some #30m is expected to be in place. The documentation for the issue will include figures for the nine months to September, audited by PW, who will act as the reporting accountants.

The shareholders’ circular issued last week said that Wickes did not intend to take any action against Andersens over its failure to spot the deception which took place in Wickes’ buying department, with the collusion of selling departments in supplier companies which provided false documentation.

Chris Nunn, risk management partner in charge of the professional standards group at Andersens, said his firm had been up against ‘a highly elaborate fraud’ and did not expect any disciplinary action from the English ICA.

The Serious Fraud Office and the DTI contacted PW and Linklaters at the start of the investigation, but have not been in touch since then. The SFO said Wickes was ‘not a current investigation’. The DTI made no comment.