Accounting regulator to investigate BDO audit of XL

The Accountancy and Actuarial Discipline Board said it has begun an
into the conduct of BDO Stoy Hayward as auditor to XL Leisure Group, the UK
travel company which collapsed last month.

The AADB, which is part of the Financial Reporting Council, the UK’s
corporate reporting and governance watchdog, said in a statement that its
investigation will focus on: ‘The conduct of BDO Stoy Hayward LLP as auditors to
XL Leisure Group in respect of the audit of the accounts of the company and its
subsidiaries for
the year ended 31st October 2007.’

The AADB said its decision to start an investigation was taken after a
reference from the Institute of Chartered Accountants of England and Wales.

In a statement BDO said: ‘XL airways operated in a volatile marketplace. The
administrators for XL have previously confirmed that XL entered into
administration having suffered as a result of unpredictable fuel prices, the
economic downturn, and were unable to obtain further funding. It would be
inappropriate to make any comments during an investigation but we will of course
co-operate in any way we can with the AADB.’

BDO replaced KPMG as auditor of XL after the Big Four firm resigned in 2006
due to concerns over accounting irregularities at the travel company.

The collapse of XL, Britain’s third largest package holiday group, left tens
of thousands of passengers stranded abroad.

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