Patisserie Valerie auditor was ‘not looking for fraud’
The former auditor of the collapsed cake chain Patisserie Valerie has argued that it is not the role of accountants to uncover fraud.
David Dunckley, chief executive of Grant Thornton, which was replaced by RSM as the chain’s auditor earlier this month, told MPs on the business, energy and industrial strategy committee that there is a “clear expectation gap” between what the public thinks auditors’ role is and what their responsibilities actually are.
“We’re not looking for fraud, we’re not looking at the future, we’re not giving a statement that the accounts are correct,” he said.
“We are saying [the accounts are] reasonable, we are looking in the past and we are not set up to look for fraud.”
“If people are colluding and there is a sophisticated fraud that may not be caught by normal audit procedures.”
He said in an ideal world it would be spotted.
Dunckley said that “audit fundamentally gives a reasonable opinion on historic information, and doesn’t look for fraud”.
Rachel Reeves, the Labour MP and committee chair, replied: “But in a shop that sells tea and cakes, you’d sort of think that might be spotted. It’s not a multinational complex organisation.”
KPMG has been appointed as administrators of Patisserie Holdings, which operates stores under several brands including the historic Birmingham name Druckers Vienna Patisserie.
Dozens of stores have now been closed and hundreds of jobs lost.
The cafe chain had been fighting for its survival since October, when it first revealed accounting irregularities that cast serious doubt over its viability.
The company said it had found “thousands of false entries” on the company’s ledgers, which was part of a “very significant manipulation of the balance sheet and profit and loss accounts”.
Investigations by the police and regulators are continuing as answers are sought as to what exactly happened and how auditors failed to spot the accounting irregularities.
The group had been valued at £450m when its shares were suspended in October, with the appointment of administrators making them worthless.
