PracticeAuditRailtrack audit fears revealed

Railtrack audit fears revealed

Serious doubts were raised by Railtrack's auditors over the company's financial viability as early as last November, Accountancy Age has learned.

Deloitte & Touche is thought to have expressed concerns about the level of the company’s indebtedness before the firm completed an independent review of Railtrack as part of the company’s interim report in November 2000.

Deloittes refused to comment this week. But in its statement on Railtrack last week the transport department said the company had been taken into administration because ‘it was, or likely to become, unable to pay its debts.’

Officials predicted Railtrack would experience a shortfall of Pounds £700m by this December and Pounds 1.7bn by the end of next March.

Railtrack chief executive Steve Marshall, a CIMA-trained accountant, said it was an ‘odd time for the state rug to be pulled from under us’.

He has resigned but chairman John Robinson said Marshall would stay on for a period of time.

The news came as Alan Bloom, Railtrack’s administrator and head of insolvency at Ernst & Young, confirmed he was prepared to override the government’s preference for a not-for-profit company to take over Railtrack by seeking a commercial buyer.

Bloom told Accountancy Age: ‘We’re looking at how we fulfil our obligations of transfer. Our advice is that we need to be proactive in this. The government is on the record as saying they’d consider other options.’

Transport secretary Stephen Byers will have the final say, but the administrators are able to present more than one proposal.

Doubts have also been raised over the quality of Railtrack’s asset register, concerns that could threaten any future deal. Despite assurances from Railtrack that it is complete, one informed source described its state as ‘sloppy’.

Links

Byers attacked over tube letter

Bloom denies Railtrack conspiracy

Railtrack risk for future PFI deals

Opinion – Railtrack: a lesson to learn.

Taking Stock – Bloom shunted into new job.

Railtrack FD challenges Byers

Deloittes could be in Railtrack firing line

E&Y appointed as Railtrack administrators

Deloittes under pressure over Railtrack

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