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Auditors in Eau Chaude?

Grant Thornton are being accused by the Receivers of Patisserie Valerie (PV) of negligence. PV imploded after it emerged that their accounts had large errors in them, and assets such as bank balances were overstated significantly.

The attached Sunday Times article is disappointing as it fails to mention at all that the accounts the Directors were relying on to mange the business would be the monthly/quarterly management accounts showing trading results. These would of course have been prepared by internal accounts staff NOT the auditors. There's no way the Directors relied on annual audited accounts to decide how well their business was doing.

The spotlight should be shining brightly on those (ex)staff who did this work, and what was in fact going on. The assumption has to be that, at the politest, the numbers were being massaged heavily before presentation to the Executive Board that ran the company day to day. Maybe the Board should have been more enquiring, but that's a separate question.

The narrow question the auditors need to look carefully into is the question of their audit work content, and whether they accepted any bland reassurances from PV staff instead having an 'enquiring mind' when doing their work.


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