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Quindell and Carillion

The Financial Reporting Council (FRC) have announced that they have fined audit firm Arrandco (formerly RSM Tenon) £750,000 and the Audit Partner Jeremy Filley £56,000 in relation to the audit of the financial statements of Quindell for the 2011 accounts. They also “reprimanded” both parties and Tenon had to pay £90,000 in costs. Both parties admitted liability. Two of their errors were a “failure to obtain sufficient appropriate audit evidence and failure to exercise sufficient professional scepticism”. In other words, quite ...

Government To Review Share Buy-Backs

The BEIS Department of the Government has announced a review of share buy-backs. That’s where the company buys its own shares in the market, a practice that used to be illegal but is now very widespread. Business Secretary Greg Clark said: “…there are concerns that some companies may be trying to artificially inflate executive pay by buying back their own shares. This review will examine how share buyback schemes are used and whether any action is required to prevent them from being ...

The Market, Renishaw and ASOS

We seem to be in one of those markets where investors are nervous because of a few big failures, some market commentators being bearish and the uncertainties caused by Brexit. While some of the “hot” stocks continue to power upwards, and the overall market trend in the UK is still positive, it only takes the slightest ripple to cause some stocks to fall sharply. That particularly applies to those where prices seemed to have got ahead of fundamentals. Yesterday (25/1/2108) Renishaw (RSW) ...

New Year Angel Competition

In light of the popularity of our Fat Santa and Scrooge competitions at Christmas time, we thought we would redress the balance and celebrate the beginning of a whole new year...

Carillion, EMIS and KPMG

Now that the dust has settled somewhat after the demise of Carillion (CLLN), it’s worth adding some more comments to my previous blog post on the subject. Ultimately it went bust for the same reason most companies do - it simply ran out of cash and could not pay its debts as they became due. As I said before, it collapsed eventually because of ballooning debt, poor cash collection and risky contracts. Unfortunately it seems that private investors were some of the ...