Three years of accounts of one of the UK’s biggest government contractors, Interserve, will be investigated by the accountancy regulator.
The Financial Reporting Council said the audit for the years 2015, 2016 and 2017 by accountants Grant Thornton would be investigated.
Last month Interserve, which has 45,000 UK staff, and 68,000 globally, was put under administration.
It is the latest major company whose accounts have come under scrutiny.
A Grant Thornton spokesperson confirmed the firm had been told about the FRC’s decision to investigate. “We will of course fully cooperate with them in this matter,” the spokesperson said.
Its work auditing the accounts of Patisserie Valerie – which collapsed in January – is also being scrutinised. The cafe chain’s former director, Chris Marsh, was arrested after having been suspended by the company when the financial irregularities were uncovered.
- Patisserie Valerie auditor faces probe over alleged fraud
- Grant Thornton fined £3m for misconduct over audits
A rival to the “big four” auditors of Deloitte, KPMG, EY and PwC, Grant Thornton was fined £3m last year after four of its senior employees admitted misconduct in handling the financial audits of Vimto-maker Nichols and the University of Salford.
The investigation into Interserve’s accounts comes at a time when the accounting industry is under intense scrutiny after high-profile company collapses.
MPs are calling for a break-up of the firms while the Competition and Markets Authority is also looking into the industry.
The way the industry is regulated has also been criticised. The FRC is to be scrapped and replaced by a new regulator for accountancy firms, the Audit, Reporting and Governance Authority.
One of the highest-profile collapses in recent years was construction firm Carillion, where the FRC is reviewing audits by KPMG.
Carillion, which had nearly 12,000 employees in the UK, had about 420 UK public sector contracts and its collapse in January 2018 will cost UK taxpayers £148m, according to the National Audit Office.
The FRC has a number of on-going investigations. Among these are KPMG’s audits of Conviviality, the alcoholic drinks distributor with brands including Matthew Clark and Bibendum which went into administration a year ago, and KPMG’s audits of engineering company Rolls-Royce.
Audits by Deloitte of SIG, which supplies insulation and roofing products and has admitted overstating its profits, are also among those being investigated by the FRC.
The FRC had also looked at Tesco’s accounts for 2012, 2013 and 2014 but concluded in 2017 there was “not a realistic prospect” that PwC would be found guilty of misconduct.
That investigation was sparked by Tesco’s 2014 accounting scandal, in which profits were overstated and led to a £129m fine from the Serious Fraud Office to avoid prosecution.