Big Six - KPMG audit under scrutiny
KPMG’s audit of troubled engineering group Powerscreen International came under fire from institutional investors last week, following allegations that it failed to signal losses in several of the company’s subsidiaries.
Institutions, which asked not to be named, were concerned that audits of two companies that produce crushing equipment – Brown Lenox and Royer – were given a clean bill of health by KPMG last year in the company’s annual report, and in a profits warning in January.
The allegations came after Ulster-based Powerscreen revealed that a series of accounting irregularities last year would lead to losses of #46.6m at its Matbro subsidiary.
The announcement came only weeks after the company asked investors to take part in a rights issue at 625p. Shares were hovering around the 50p mark as we went to press.
Auditors from KPMG’s Belfast office were sent in by the company board to investigate after the profits warning.
Belfast partner Glyn Owen submitted a report to the Powerscreen board two months ago. The board passed the report to the Department of Trade & Industry and the Serious Fraud Office, which has begun a full-scale investigation.
The KPMG report is also being checked by forensic experts from Ernst & Young.
Powerscreen warned last week that losses in the year to March had mounted to #65m after further losses at Brown Lenox and Royer.