BDO faces FRC investigation over audit of collapsed construction firm
Accountancy firm BDO is being investigated by the UK accounting regulator over its audit of collapsed construction company NMCN.
The Financial Reporting Council confirmed on Thursday it was examining the BDO’s audit of NCMN’s financial statements and its final set of accounts before it filed for administration on October 4.
BDO resigned as the group’s auditor in July, after 10 years in the role.
NMCN initially reported revenues of nearly £406m and pre-tax profits of £7.7m for the year to December 31 2019.
It then later restated its profits as £2.1m, due to “errors that should have been identified and corrected at the reporting date.”
The London-listed group later announced that estimated losses for the company had increased to £43m while a review of all its contracts showed that many were loss-making, especially in its water business.
Trading in NMCN’s shares was suspended in June, and there was an extensive delay to its financial results for 2020.
Talks of a last-ditch rescue deal headed by Andrew Tinkler, the former boss of Stobart, also failed at the start of October.
The investigation into the UK’s fifth-largest accounting group is the latest in a series of actions by the regulator against smaller rivals to the dominant Big Four: Deloitte, EY, KPMG and PwC.
It follows speculation that government ministers could go ahead with proposals to force companies to hand over part of their audits to mid-tier accountants.
The intention is to boost competition in the market.