The first sentence of the letter states that KPMG's report is preliminary and subject to further work. And no more was done apparently.
I have always been suspicious of, unusually senior, people who say that they only look at the "big picture". Sometimes you need to understand the detail in depth in order to see a wider view.
In this case for example there is very little DD on tax as KPMG were not allowed access to the company's external advisers. At the very least you would want to know why as there might be a host of problems when you raise the bonnet, which in turn could affect other areas of the business.
Due diligence reports are by their nature, not easy to read and dull as ditchwater. But you're the client, if it's really impenetrable, ask for clarification or an executive summary. If you think that's expensive, see what it costs if you don't do proper due diligence.
I did this for a client a couple of years ago. Ceased trading, tax up to date and they sent in DS01. HMRC objected so we submitted a final tax return (nil) and company was struck off.
Since then I have done as Jennifer suggests and submitted final tax return then written to HMRC to say that the company is applying to be struck off but there were no transactions since the tax return that was submitted and no tax due. It's worked so far.
I joined the accountancy profession in August 1980 taking articles with a firm which has since been merged with another.
Thirty nine years ago there was a discussion about whether auditors could be independent if they were appointed by the board of a client.
At the same time there were internal discussions in the accountancy works about the "expectation gap".
Amazingly nothing has changed.
This is going back a bit but I can remember a Scottish player, Donald Ford who played for Hearts in the 1960s and 70s in the old Scottish First division, and also played for Scotland, who was a CA.
Before that another Scottish player for Liverpool in the 1950s, Billy Liddell was a CA.
Before Rugby Union turned professional, I think there were loads of players who had another career, playing at the top level, including internationals.
It's a long time since I worked in a large firm but from recollection time sheets never recorded time accurately. Aside from the time spent making coffee etc there was also the unrecorded overtime that was done.
Despite regular instructions from partners to record all time, it was easier to work overtime but not record it rather than be faced with a WIP balance that couldn't be recovered and you would then need to explain the write off.
I joined a firm in 1980 as a new graduate and this question has been raised ever since then, and presumably before as well. More accurately the firms question is "how do we retain the staff we want?"
Evidently there is no easy answer if it has been asked for well over 38 years.
One problem is the nature of the firms themselves. Newly qualified accountants, particularly in audit, are faced a thankless task which is now under increasing scrutiny by the public at large. They see unrealistic budgets to be controlled by managers who have to work all hours to get the reward of a partnership and even that is not certain. When you get closer, it becomes apparent that junior partners don't earn the megabucks you might imagine, and there's another slog through the ranks of partner.
Hardly surprising that many foresee a different and more exciting career path.
My comment was to Black Knight who suggested that the landlord had been gullible. Possibly so but the TV news implied otherwise.
I saw something about this on the local news (I think it was the same case). The landlords were a married couple who had taken steps to recover the rent almost as soon as it was in arrears but were thwarted each time by the tenant, though the TV didn't say how. Eventually they racked up massive legal fees in dealing with it. Probably not recovered the rental arrears either.
Pre pack again
My inclination is to agree that pre packs are a rip off.
Tenon had already warned shareholders that they would get little value for the equity due to the high level of debt, and as was reported here, the shareholders were not happy with that.
Baker Tilly would have been liable for the debt on a takeover but with a pre pack the debt is not its responsibility and the shareholders still get nothing.
Presumably Lloyds Bank will get as much of the debt that can be repaid following the sale of the assets to Baker Tilly, and they must have seen this as the best way forward. Also suspect that in the larger scheme of things the write off for Lloyds is not significant.
The question remains about other creditors who now will not get paid in full and for whom a write off may be significant.
We have seen it in the private sector for years that these appraisal systems can be so time consuming that they take senior staff away from doing the job they employed to do. Thankfully I am now well out of it but I found that a system that involves some sort of grading soon turns out to be a job creation scheme for the HR department
In any event, if you know in advance that 20% will exceed expectations, doesn't that mean that your expectations are too low?