The former managing director of Allied Carpets has been disqualified as a director for seven years over long-running accounting irregularities that over-inflated sales at the retail chain by more than #6m.
Raymond Anthony Nethercott, of Vicarage Wood Way, Tilehurst, Reading, was disqualified after a Department of Trade and Industry investigation found he had ‘knowingly inflated sales figures in accounting records, giving an untrue picture of the state of company finances and profits.’
He also lied to auditors from Arthur Andersen and flouted the company’s accounting policy, the DTI said as it revealed its findings this week.
The discovery of the scandal in 1998 led to the resignation of the company’s then finance director David Pout and the ditching of Andersen as Allied’s auditor.
An exceptional charge of #3m was made to the company’s 1998 accounts to correct the errors that had arisen from ‘pre-dispatching’, which involved the early booking of sales.
The practice, which dated from 1992 to 1998, was brought to AA’s attention by an Allied employee. Subsequent investigations found that the company was overstating sales by more than #6m, boosting profits by more than #2m.
Pout, now working at Hays Accountancy Personnel, and operations director Steve Barber resigned in August 1998.
Nethercott parted company with Allied in April the following year after fellow directors decided he had played an integral part in the practice.
In a statement, the DTI said: ‘The investigation found Nethercott responsible for the policy of pre-dispatching, which was in breach of company accounting policy; the practice had been deliberately concealed from the company’s auditors and the company’s published accounts were consequently misleading and failed to comply with company law. Poor company operating practices were blamed for the practice continuing unchecked for so long.’
Nethercott could not be contacted and Pout was unavailable for comment.
A carpeting for the rug rats www.accountancyage.com/Business/102459.
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