FRC closes investigation into former Bargain Booze owner

The Financial Reporting Council (FRC) has announced the closure of its investigation under the Accountancy Scheme in relation to the preparation and approval of Crewe-based Conviviality plc’s financial statements and other financial information by a member of the ICAEW (Institute of Chartered Accountants in England and Wales).

After a detailed review of the evidence, the executive counsel said it has decided that the test for bringing enforcement action against that member of the ICAEW is not met.

Accordingly, the case has been closed.

The FRC announced the investigation into the collapse of the firm which owned the Bargain Booze chain of off-licences on July 3, 2018.

It focused on the audit carried out by accountancy firm KPMG.

Conviviality went into administration in April 2018 after two profit warnings which it said stemmed from accounting errors and a £30m tax bill.

The Financial Reporting Council said it had launched the probe into the financial statements of the wine retailer and supplier for the 52 weeks ended 30 April 2017.

A KPMG spokesperson said at the time: “We note today’s announcement by the FRC of its investigation of the preparation, approval and audit of the financial statements of Conviviality for the year ended 30 April 2017.

“We believe we conducted our audit appropriately and will co-operate fully with the investigation.

“As reported by the company, it experienced margin weakness at the start of 2018 and also a significant payment to HMRC which had not been included within its short term cash flow projections, creating a short term funding requirement.

“Our audit of the company’s financial statements for the year ended 30 April 2018 had not yet commenced at the point which administrators were appointed.”

Conviviality’s first profit warning was due to an error in its accounts, while the second related to a tax bill.

Magners owner C&C Group bought Conviviality’s wholesale business while Bestway acquired the retail business for £7.5m.

The statement from the FRC read: “The Financial Reporting Council (FRC) has commenced an investigation into the audit by KPMG LLP (KPMG) of the financial statements of Conviviality plc (Conviviality) for the 52 weeks ended 30 April 2017. The investigation will be conducted under the Audit Enforcement Procedure.

“The FRC has also commenced an investigation under the Accountancy Scheme into the preparation and approval of Conviviality’s financial statements and other financial information by a member of the ICAEW.”

Conviviality went into administration on 5 April 2018.