Thursday, 15 November 2012

Farepak complaint

A formal complaint has been filed against the international accountancy firm Ernst & Young and one of its auditors in connection with the collapse of the Christmas hamper company, Farepak, in October 2006.

The disciplinary body for auditors, the Financial Reporting Council, alleges that Ernst & Young failed properly to consider the effect of certain "post balance sheet events" after it signed off the company's 2005 accounts in early 2006.

It also alleges that the firm failed properly to consider Farepak's ability to continue as a going concern, amongst a number of charges.

Ernst & Young will have a chance to answer the allegations at a tribunal hearing next year.

The firm said "We obviously take these matters extremely seriously, but it would be inappropriate for us to comment further before the Tribunal".

The FRC can take disciplinary action against its members but the case will not directly affect the amount of compensation paid to Farepak customers.

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