Newsham facing FRC tribunal over Worthington Nicholls audit
FRC launches disciplinary hearing into conduct of Paul Newsham, a former audit partner at Worthington Nicholls auditors Sixonethreeone
FRC launches disciplinary hearing into conduct of Paul Newsham, a former audit partner at Worthington Nicholls auditors Sixonethreeone
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.