Nationwide inquiry draws in E&Y
Ernst & Young is at the centre of an inquiry after accounting irregularities were uncovered at its former audit client Nationwide Accident Repair Services, leading to a £2.4m overstatement in profits.
Nationwide has released a statement saying it has suspended one of its finance managers and is looking at further disciplinary action if necessary.
Grant Thornton which took over after E&Y resigned as company auditor in October last year is undertaking the investigation.
The profits adjustment relates to stock, debtors and creditors recorded in 1999 which has also affected accounts in 2000 and 2001. Management said that no indication of fraud had so far been uncovered.
Ernst & Young said: ‘From our initial discussions it appears that the majority of problems outlined relate to issues we raised during the course of our 1999 audit which their management and ourselves felt had been satisfactorily resolved.’
The irregularities were uncovered as part of the 2001 year-end audit. The company said the adjustment would impact on the group’s profits before tax for the year ended December 2001 and would be reflected in the preliminary announcement planned for 27 March 2001.
Nationwide shares dropped 8.5p to 72.5p on the news.