Accounting fraud hit Patisserie to replace auditor

FILE PHOTO: A woman walks past a branch of Patisserie Valerie in London, Britain, October 10, 2018. REUTERS/Simon Dawson/File Photo

(Reuters) - British cafe chain owner Patisserie Holdings Plc CAKEP.L said on Thursday it intends to appoint RSM UK Audit LLP as its new auditor, replacing Grant Thornton, as the company tries to recover from an accounting black hole it uncovered in October.

The scandal led to the arrest of the company’s finance chief Chris Marsh and suspension of trading in its shares. Chairman Luke Johnson stepped in to lend 20 million pounds of his own money to keep the company running.

The Patisserie Valerie cafe chain owner has been under pressure since the accounting irregularities were discovered and reports emerged that then CEO Paul May and Marsh had been issued twice the number of shares it had disclosed in official filings.

Britain’s accounting watchdog is currently investigating Grant Thornton UK’s audit of Patisserie’s financial statements for 2015-2017.

RSM’s own audit by PricewaterhouseCoopers LLP had come under scrutiny by the Financial Reporting Council (FRC) in 2017, which fined PwC 5.1 million pounds after it admitted to misconduct.

($1 = 0.7920 pounds)

Reporting by Sangameswaran S in Bengaluru; Editing by Saumyadeb Chakrabarty