Micro-auditor of Gupta empire under investigationby
The accounting regulator has opened an investigation into the two-partner micro-auditor that signed off the accounts of Sanjeev Gupta’s steel empire.
King & King, which audited the accounts of 60 companies in the Gupta Family Group Alliance (GFG), is now facing an investigation from the Financial Reporting Council into four audits of Liberty Steel belonging to Sanjeev Gupta (pictured above right in 2016 with Scottish government minister Fergus Ewing).
The regulator is looking specifically at the audit of four financial statements in the Gupta empire, including Liberty Speciality Steels Limited for the year ended 31 March 2019, Alvance British Aluminium Limited (formerly Liberty Aluminium Lochaber Ltd) for the year ended 31 March 2019, Liberty Steel Newport Limited for the year ended 31 March 2019; and Liberty Performance Steels Limited for the year ended 31 March 2020.
King & King is not the usual Big Four firm expected to pick up the audits of the billion-pound empire-like GFG Alliance. The unassuming firm of chartered accountants and chartered tax advisers are based in central London.
As explained on its website, the firm was established in 1956 and claims that its “clientele enjoy the benefits of our vast experience and personal service that few can equal”.
Thurst into the spotlight
When this tiny audit firm was thrust into the spotlight in the summer of 2021, questions were asked about how an unknown two-office firm like this is auditing 60 GFG companies in the UK with combined revenues of nearly £2.5bn
The director of Tax Research UK, Richard Murphy told AccountingWEB at the time, “Is this firm so big they have other clients that Gupta, despite its apparent prominence, is only 15% of their fee income?”
The FRC decided to investigate the statutory audits by King & King in an FRC’s Conduct Committee on 22 February 2022. However, the watchdog emphasised in the press release that “the investigation does not relate to any persons other than the relevant statutory auditor(s) and it would not be fair to treat any part of this announcement as constituting or evidencing an investigation into any other persons or entities”.
The investigation comes as the Serious Fraud Office (SFO) continues its probe into the Gupta Family Group Alliance (GFG), and its financial relationship with Greensill, for suspected fraud, fraudulent trading and money laundering.
Last week the SFO stepped up its investigation into Gupta’s empire by requesting documents, including company balance sheets, annual reports and correspondence, and questioned executives in multiple offices.
Sanjeev Gupta has been under scrutiny since the collapse of Greensill and how this pushed Gupta-owned Liberty Steel to the brink of collapse.