Accounting irregularities have forced Armitage Brothers to strike £200,000 from the annual profits of its Aitchisons wholesaling division.
The Nottingham-based producer and distributor of pet products has also admitted that the loss from the irregularities uncovered in June could total £700,000 spread over several years.
BDO Stoy Hayward, Armitage’s auditors, and Deloitte & Touche are working to identify the exact cause of the overstated profits. The police are also investigating.
Alan Baines, senior partner of BDO Stoy Hayward in Nottingham, said the errors in the accounts had occurred over a long period of time.
‘This year’s profits will be hit by £200,000 with further years expected to total £500,000,’ he explained.
‘There is not much to add at this stage because we are in the reporting stage.’
Stoys replaced PricewaterhouseCoopers as auditor less than two years ago.
Aitchisons, which is based in Grangemouth, Scotland, sells pet products to retailers. It is understood to have generated annual sales of between £2m and £4m and pre-tax profits of £100,000.
The write-off, combined with a £150,000 restructuring charge, helped slash pre-tax profits to £1.5m in the year ended 30 May.