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AIA

New Healthcare Locums probe to target auditors

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29th Nov 2011
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The Accountancy and Actuarial Discipline Board (AADB) has launched an investigation into the conduct of certain members of the ICAEW, ICAS and of BDO as auditors of Healthcare Locums (HCL) and their role in the accounting scandal that nearly destroyed the company.

HCL shares were suspended at that start of the year after it discovered accounting irregularities that led to its founder Kate Bleasdale stepping down. By September Healthcare Locums had announced a substantial refinancing of the company, raising £60m in an equity placement and open offer of up to £4.25m, to pay down some of its £110m outstanding debt.

The new investigation relates to the preparation, approval and audit of the troubled medical staffing business’ financial statements and of its subsidiaries for the years ended 31 December 2008 and 2009; as well as interim financial statements for the six months up to 30 June 2010.

The board will also delve into the operation by Healthcare Locums of the discounting facility with Barclays Bank during 2010 and compliance with NHS terms and conditions, as set out in the framework agreements up until 30 June 2010.

Alarm bells were sounded back in January when HCL suspended executive vice chairman Kate Bleasdale and chief financial officer Diane Jarvis amid allegations of accounting irregularities. This was then followed with Bleasdale resigning from the board of directors, having founded the healthcare recruitment firm back in 2003.

One of the main accounting issues that came to light concerned HCL’s £6.7m acquisition of Redwood Health from Bleasdale's husband John Cariss, when auditors refused to sign off the company accounts. This was then followed by the uncovering of a related-party transaction involving Bleasdale, HCL and Cariss.

The investigation is expected to extend to three former directors: Diane Jarvis, Alan Walker and Mo Dedat, who are all members of the ICAEW.

The AADB’s decision to initiate an investigation was taken following references from the ICAEW and ICAS.

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