Auditor warned of ‘financial irregularities’ at XL
14.09.08
The collapsed tour operator XL Leisure Group was warned of ‘financial irregularities’ by its auditor almost two years ago, it emerged today. In a strongly-worded resignation letter, accountancy firm KPMG said in October 2006 that it was blocked from investigating alleged misrepresentations by company directors that could have resulted in ‘material errors’ in financial statements.
The warning of potential financial irregularities at XL was made in a Companies House filed document dated October 16, 2006. In the document KPMG explained why it had resigned as XL's auditor. It stated: ‘We are no longer able to conclude that the financial statements give a true and fair view of the profit of the company and its subsidiaries.’
An investigation into arrangements between XL and a supplier concluded that information had been ‘misrepresented’ to KPMG from ‘certain directors’. As a result ‘financial statements were likely to contain material errors’, auditors concluded. But they were blocked from investigating the matter further, leading to the resignation.
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