PracticeAuditBDO says it dealt with XL issues

BDO says it dealt with XL issues

BDO Stoy Hayward has 'dealt promptly' with accounting irregularities at collapsed travel company XL Leisure Group since departure of KPMG

BDO Stoy Hayward, the
auditor of XL Leisure Group,
has said it dealt promptly with accounting irregularities at the collapsed
travel company after the resignation of the previous auditor
KPMG in late 2006.

KPMG resigned in October 2006 over irregularities relating to a delayed
supplier payment.

In a statement earlier this week BDO said: ‘Any client BDO Stoy Hayward takes
on undergoes a rigorous client acceptance process. As part of our professional
clearance procedures, we met with KPMG to understand their reasons for resigning
as auditors to XL Leisure Group and the nature of the financial irregularities
that subsequently came to light on the 2005 financial statements on which they
reported.

‘Prior to accepting appointment we stipulated to the company that in order to
address these concerns we would need to undertake significant additional
investigatory procedures as part of our audit of the 2006 financial statements.
As a result, the 2006 financial statements recorded significant restatements of
the comparative financial information.’

The irregularities at XL ­ which collapsed last week, leaving tens of
thousands of passengers stranded abroad – were caused by some of its staff at XL
delaying the payment of invoices to airline catering company
Alpha Airports.

The delay flattered XL’s figures ahead of a flotation of its then parent
company, Avion, on the Icelandic stock exchange.

After an initial investigation into the irregularities KPMG still had
concerns over the accounts but felt it had been ignored. ‘In the light of the
above concerns we have resigned as auditors with immediate effect,’ KPMG said in
its resignation letter.

Attempts to find a buyer for XL were continuing this week. Administrator
Kroll declined to comment on possible buyers for XL, which blamed rising fuel
prices for going bust. Around 1,500 of XL’s 1,700 staff have been made
redundant.

Last week the chief executive of
British
Airways
Willie Walsh warned that up to 30 airlines will go bust before
Christmas.

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