Patisserie Valerie faces FRC audit probe

The Financial Reporting Council (FRC) is to investigate Grant Thornton’s auditing of Patisserie Holdings, the parent company of upmarket high street cake chain Patisserie Valerie, and will also examine the information provided by ICAEW member Christopher Marsh, its former chief financial officer

The move comes six weeks after the company revealed it had found ‘significant, potentially fraudulent, accounting irregularities’, resulting in Marsh’s suspension and a halt on trading of its shares on AIM.

The FRC will investigate Grant Thornton’s audit of the financial statements of Patisserie Holdings for the years ended 30 September 2015, 2016 and 2017 under its audit enforcement procedure.

It will also conduct an investigation under the accountancy scheme into Marsh’s preparation and approval of Patisserie Holdings Plc’s financial statements and other financial information provided by Marsh.

Patisserie Valerie’s original announcement of a ‘black hole’ in early October was followed shortly after by news of the discovery of a winding up order against the company brought by HMRC over a £1.4m tax bill and the uncovering of two separate £10m loans negotiated with the café’s lenders which had not been reported to the board.

The company was also forced to outline details of its three-year 2014 long-term incentive plan for executives (LTIP), after it emerged that awards made to Marsh and others may not have been correctly disclosed and recorded in the accounts.

Grant Thornton was paid £120,000 for its audit of Patisserie Holdings last year, according to the 2017 annual report and accounts. It has been the company’s auditor since it listed on AIM in 2014. A spokesperson for Grant Thornton UK LLP said: 'I can confirm we have received a letter from the FRC informing us of its decision to commence an investigation and we will, of course, fully cooperate in this matter.'

Marsh, who was arrested by police and released on bail when the news of the accounting regularities first broke, joined Patisserie Holdings as finance director in 2006. He resigned as CFO shortly after his suspension was announced.

He qualified as an ICAEW member with Vantis (formerly Morton Thornton) and also qualified as a chartered tax accountant with EY, and his previous experience includes finance director roles at two AIM quoted companies, Fishworks and Healthy Living Centres.

Report by Pat Sweet

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