In a filing with Companies House, High Street Groups former auditors, Big Four accounting juggernaut PWC, have finally revealed why they resigned from their post.
PWCs declaration is damning: it states that it resigned because it couldnt trust the figures HSG was giving it, making an auditors job impossible.
Moreover, HSGs management consistently blanked PWCs attempts to obtain reliable information.
The reason we are ceasing to hold office is that, since our appointment we have obtained information that leads us to conclude that the Companys control environment is not sufficiently robust to enable us to obtain reliable audit evidence. Management has failed to provide accurate and timely explanations in response to recent specific questions nor has complete evidence been provided in response to those questions. There have been delays in the provision of information to us for an extended period, which has prevented us from completing our testing. Further, the information has not been of the required quality, despite discussions with management in this regard which leaves us unable to reach a conclusion on our testing. Due to the pervasive nature of these issues, we are unable to fulfill our professional obligations for the year ended 31 December 2018 and are unable to continue to hold office as auditors.
The above was sent to Gary Forrest on 18 September 2020. However, PWC were gagged from revealing the letter to the public until January by a court application by HSG. This court application was dropped on 19 January and consequently PWC filed its resignation notice with Companies House a couple of days later. The statement was released to the public by Companies House today.
The Company having issued an application pursuant to section 520(2) of the [Companies Act 2006], we did not send a copy of the Statement to the Registrar (in accordance with section 521(1) of the Act). Those proceedings were however discontinued by the Company on 19 January 2021 and, accordingly, we now enclose the Statement.
The relevant section of the Companies Act states, in brief, that when a company has been sent a statement by a resigning auditor that needs to be brought to the attention of the companys creditors, it must forward the statement to them within 14 days, or apply to the court and attempt to satisfy the court that the auditor is using the provisions of section 519 to secure needless publicity for defamatory matter.
As HSG has now dropped its attempt to gag PWC, we can take it as read that PWCs resignation letter is not in fact defamatory.
PWC left office having never signed off any of HSGs accounts. High Street Group finally filed 2018 accounts for the holding company, High Street Grp Ltd, at the turn of the New Year. The accounts were audited by Haines Watts, and marred by an Adverse Opinion over the timing of HSGs attempt to dump the liabilities of High Street Commercial Finance out of the group.
We can only assume that Haines Watts had better luck than PWC in obtaining timely and accurate information from HSG.
HSG remains overdue with its 2018 accounts for High Street Commercial Finance, the arm that owes money to its earlier bondholders, by a whole year and a half and is overdue with its 2019 accounts for both HSCF and HSGrp. No action has been taken by Companies House against HSG that is in the public domain, despite its repeated flouting of the Companies Act.
All HSGs previous accounts filed with Companies House were unaudited, under small companies exemptions despite HSG claiming a 2016 profit of £26 million and over 100 employees in its investment literature, which would have made it ineligible for those exemptions. Despite issuing repeated legal threats over my pointing this contradiction out in my original review, HSG has never been able to explain the contradiction.
Hat tip to two readers who flagged up the filing on Companies House.