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Barclays loses to Grant Thornton in the High Court

Grant Thornton (GT) was victorious in its legal dispute with Barclays bank concerning Von Essen Hotel (VEH) Group’s non-statutory audits.

The issue started when the accounting firm signed off accounts for the hotel group for the period between 2006 and 2009, stating that its finances were in good health. Months later, the group disbanded.

Barclays labelled GT negligent, as the decision to go ahead with the £250 million loan to VEH was made partly based on its audits. Barclays said that GT showed negligence because it failed to uncover fraudulent activity and made overstatements of GT’s accurate finances. When VEH disbanded, the bank was faced with the task of recovering a debt it was unlikely to recoup.

However, in the reports, GT had made it clear that the contents were for VEH only, along with the director, and that there was no responsibility held by the accounting firm to any other company for its audits. Barclays made the argument that the disclaimer was unrealistic.

Justice Cooke felt there were no grounds for misunderstanding and that any member of staff at Barclays will have been able to comprehend what was in the reports. He said that Grant Thornton’s disclaimer was clear.

It is not uncommon for such discrepancies to end up in court, which is why it is wise for businesses to be as straightforward and honest as they can be in their financial reports. An accountant in the Wirral can certainly guide them in the right direction.

Posted by Louise
March 6, 2015
Finance

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