Deloitte pursues KPMG over audit of Goals Soccer Centres

Deloitte pursues KPMG over audit of Goals Soccer Centres

Investigations into accounting fraud at Goals has involved HMRC, the FCA, BDO, RSM, Deloitte and could see KPMG on the wrong end of legal action, according to reports

Deloitte pursues KPMG over audit of Goals Soccer Centres

KPMG is being pursued by a rival Big Four firm over its audit of five-a-side football pitch operator Goals Soccer Centres following accounting fraud dating back to 2009, according to The Sunday Times.

Deloitte, which acted as administrator to the company before it was sold in October 2019, is pursuing KPMG over an alleged misdeclaration of the company’s VAT liabilities, occurring over several years, according to the report.

The Sunday Times has also reported that HMRC is preparing to prosecute the directors over a tax bill of £16.3m. In addition, the FCA has launched an investigation into the failures, and documents were handed to the serious fraud office.

A statement from Goal’s board on 31 October 2019 said: “The Board has already taken steps to preserve the Company’s legal rights to compensation from parties who might be liable through negligence or more direct involvement, and entered into standstill agreements with former directors and also with its auditors of 15 years, KPMG.

“The Board is hopeful that action will be taken to hold those responsible to account, where appropriate. The Board members would be supportive of any such action.”

However, the statement also acknowledged that it would be very unlikely that shareholders of Goals would receive any value for their shares.

Deloitte was first appointed in June by Goals “to advise on all options available to the company” following discussions with HMRC regarding the tax errors, and to work with the board’s advisors to plan for potential actions to take.

BDO Investigation and lack of HMRC guidance

The Goals board suspended its shares in March 2019 when the accounting scandal first emerged. A junior auditor discovered years of VAT misdeclaration appeared to show a £12m tax debt, according to The Sunday Times report.

Mid-tier accounting firm BDO, which took over as the company’s auditor in June 2018, was asked to investigate by the board. Its report claimed that Gow has asked Rogers to “work his usual magic” and create false invoices.

The BDO report – which has not been publicly circulated – also claimed to find that the pair had been adjusting financial statements in order to stop Goals from breaching covenants with Bank of Scotland.

BDO reported in September that profits had been overstated by around £40m over the past decade, and that it had found “substantial destruction” of electronic information at the company.

The board’s public statement said that BDO’s investigation identified “serious issues concerning the accounting treatment of VAT”.

The statement from Goals’ board said it had not received clear guidance from HMRC: “The company then engaged both RSM and an independent tax expert to review the VAT situation.

“Having reviewed the last four years of accounts and transactions in fine detail, these parties reported to the Board that they believed that this misdeclaration amounted to £13.2m, plus interest and any penalties HMRC deemed appropriate.

“Although the Company engaged openly with HMRC from late March 2019 and pushed to progress to a resolution of this matter, HMRC have so far declined to give the Board clear guidance. The reasons for this are unclear.”

It was announced in October 2019 that Goals was to be acquired by Northwind 5s Limited for around £27m, a newly formed company backed by private equity firm Inflexion.

When approached for comment Deloitte, the FCA and BDO declined. HMRC does not comment on identifiable taxpayers. KPMG are yet to respond, and Goals were not contactable.

Resources & Whitepapers

How to optimise your compliance lifecycle

How to optimise your compliance lifecycle

5m
The new rules of accounting

The new rules of accounting

6m
5 ways internal productivity can boost your profitability

5 ways internal productivity can boost your profitability

6m
Crushing the Four Barriers to Growth

Crushing the Four Barriers to Growth

6m