Allied Carpets’ former auditor Arthur Andersen has described itself as ‘totally powerless’ to investigate the company after the resignation of managing director Ray Nethercott amid claims that he misled the board about the extent of irregularities in accounting systems.
Andersens ended its relationship with the carpet retailer following discoveries last summer that staff had entered sales into the computer which were incomplete and artificially inflated the profit figures.
In a statement last week, Allied said that ‘in contrast to statements made to the Board at the time, Ray Nethercott was aware of the accounting irregularities that were investigated last August.’
But despite this admission, Andersens audit partner Ian Plaistowe said that the firm had no power to talk to people at the company and mount an investigation. ‘The problem is when you get into the area of collusive fraud. We can look back and see that we have been misled,’ he said.
Plaistowe, who also chairs the Auditing Practices Board, is calling for an urgent review of the gap between what is expected of auditors and the responsibility of auditors and directors. This forms part of the wider remit of the current company law review.
Andrew Tyrie airs views on the Finance Bill, 'Making Tax Policy Better' report, and Brexit
In our latest managing partner Q&A looking towards 2017, CVR Global's Richard Toone talks about recruitment, and the potential threat of competition from the legal sector, as key issues for the firm in the coming year
Deloitte to avoid tendering for government contracts over the next six months, to appease Theresa May following consultant's report that painted a less-than-flattering picture of Brexit plans
In our first Q&A looking towards 2017, Menzies senior partner Julie Adams flags up increasing digitisation, aligned with more hands-on consultative services, as the key mix for her practice