Blind spot: Nicola Quayle signed off the accounts of Eddie Stobart
A former senior partner at KPMG is under investigation over the company’s audit of haulage firm Eddie Stobart – having already been fined a total of more than £150,000 for two other botched jobs.
Britain’s accounting watchdog is examining Nicola Quayle’s role in the audit of the lorry company, which came close to collapse over two years ago, The Mail on Sunday can reveal. Quayle, 52, who served as head of KPMG’s Manchester office, signed off on the audit under investigation.
The explosive revelation comes just weeks after she was handed a £110,000 penalty and a stinging reprimand by the Financial Reporting Council (FRC) over the audit of Conviviality, the owner of off-licence Wine Rack and discount chain Bargain Booze. It fell into administration in 2018.
She was also hit with a fine of £45,000 in 2020 by the watchdog in relation to an unnamed company’s audit. On top of the financial penalty, she was reprimanded and ordered to undertake training.
The fines were discounted to £80,850 and £29,250 respectively for prompt payment.
One accounting expert said he had ‘never seen an instance like this’ where a senior partner was investigated over three separate audits. It comes just days after KPMG revealed the average annual rewards handed to its partners rocketed by a fifth to £688,000 last year because of a surge in consultancy work on corporate deals.
Quayle, who led the Manchester office for two years until December 2019, was also a non-executive director on the board of KPMG UK. She continues to work with the firm on a contract basis, assisting with a number of internal projects. She does not carry out audit or client-facing work. The investigation into her audit of Eddie Stobart has until now been kept under wraps. It is not uncommon for the FRC to investigate key individuals in an audit.
The haulier, whose brightly coloured red and green trucks are a familiar sight on motorways, was on the brink of collapse in 2019 after it emerged that profits had been overstated by £2million the previous year. Shares in the logistics firm were suspended in August 2019 for six months after it issued a profit warning. Chief executive Alex Laffey resigned.
The errors were uncovered by Eddie Stobart’s finance boss at the time, Anoop Kang – but KPMG, which was meant to check the accounts gave a true and fair view, failed to sound the alarm. KPMG resigned as auditor after its 2017 audit, blaming ‘a breakdown in our relationship with management’.
The firm added this was caused by problems obtaining the evidence it needed to carry out its audit of the company for the year to the end of November 2017. Rival auditing giant PwC was appointed after KPMG stepped aside.
Watchdogs have embarked on an investigation of the KPMG audit of 2017, which was signed off by Quayle, and of the PwC audit in 2018.
Driven to distraction: Haulage firm Eddie Stobart came close to collapse over two years ago
The lorry business was a stock that had been held by disgraced fund manager Neil Woodford, one of the company’s biggest share holders at the time that its shares were suspended.
The latest development is another setback for KPMG, which has come under fire for a string of audit failures. It was the firm responsible for checking the books at Carillion, the construction company that collapsed in 2018.
KPMG chief executive Jon Holt admitted last month that the firm had misled the FRC over its audit. A disciplinary tribunal heard that some of its auditors had made up fake documents to mislead the regulator. Liquidators of Carillion are now suing KPMG for £1.3billion.
It was also criticised over its audits of the collapsed Co-op Bank, bed company Silentnight, insurance underwriting agent Equity Syndicate Management and insurance outsourcer Quindell. Meanwhile KPMG Switzerland failed to spot the bribery scandal at FIFA. It had audited world football’s governing body since 1999.
A spate of corporate collapses involving failed audits by all the big firms has prompted the Government to enact sweeping reform of the accounting profession, which includes the creation of a new watchdog to replace the FRC.
City veteran Jan Du Plessis, the former chairman of BT, was named as the new chairman of the FRC as it is being transformed into the new, supposedly tougher, Audit, Reporting and Governance Authority. The FRC, which imposed £16.7million of financial sanctions in 2021, declined to comment. Quayle also declined to comment.
KPMG said: ‘We note the announcement from the FRC regarding commencement of an investigation into the audit of Eddie Stobart Logistics for the year ended November 30, 2017. We will cooperate fully with the FRC to conclude this matter as quickly as possible.’
