Grant Thornton takes on £1.8m Staffline audit

AIM-listed recruitment group Staffline has hired Grant Thornton after PwC resigned the audit account in the summer over concerns about potential covenant breaches

The mid-tier firm is taking over the audit with immediate effect, following a competitive tender process led by the company's audit committee, and will audit the company's full year results for the year ending December 2019, currently expected to be published in March 2020.

PwC was paid £1.8m in audit fees for the year end 2019 audit, described as a one-off exceptional charge due to a refocused audit brief following a whistleblower report into alleged accounting irregularities which resulted in an enhanced audit.

The company is facing an HMRC investigation into non-compliance with the national minimum wage legislation from 2013 to 2018, as well as the fallout from a whistleblower report of accounting irregularities which resulted in an enhanced audit for year end 2019.

When Big Four audit firm PwC resigned as auditor in August after four years it immediately stepped down citing concerns over material uncertainty and contractual obligations, as well as risks of potential covenant breaches. 

The PwC auditor’s report for year end 30 April 2019 stated: ‘In light of the uncertainties disclosed in relation to future trading results and cash flows, the group has forecasted further covenant breaches for the next 12 months from 30 June 2019 as a result of the increase in net debt and the reduction in underlying profits.’

Grant Thornton replaces PwC LLP which was the company's auditor since 2015.

Founded in Nottingham in 1986, Staffline has reported turnover of £1.1bn and two operating divisions. The recruitment division supplies over 60,000 blue collar works a day to around 1,500 private sector clients, while PeoplePlus division is an adult skills and training provider. The company first listed on AIM in 2004.

 

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