PwC defends its Luminar auditor role
Former auditors flag up emphasis of matter statement in company's latest set of accounts
PWC has flagged up its emphasis of matter statement in the last set of accounts for collapsed nightclub operator Luminar.
The firm has spoken about the issues of going concern it raised in Luminar’s most recent annual accounts, published in May, as questions are asked about the circumstances surrounding the bar operator’s insolvency.
A statement from PwC said: “Our opinion in Luminar’s annual report for the year ended 26 February 2011 clearly highlighted the severe issues the company faced in relation to its ongoing business.
“We do not include emphasis of matter paragraphs lightly in audit opinions.”
Alan Hudson, Tom Lukic and Alan Bloom, partners at E&Y, were appointed yesterday as joint administrators to Luminar following the refusal of lenders, including Lloyds TSB, RBS and Barclays, to extend certain waivers on its credit facilities.
The lenders had granted a waiver to certain banking covenants in May, which were due to end this week.
In Luminar’s 2010/2011 annual report, auditors PwC warned if its client failed to extend or modify banking covenants, which was a strong possibility, there would be a risk to future liquidity that would result in the company no longer being solvent.
In August PwC was succeeded by KPMG as auditors. PwC said at the time: “We have been informed by the company [Luminar] that it is of the view that a fresh audit relationship would benefit the company moving forward and has asked us to resign its position as auditor to the company.”
In the annual report Luminar said PwC was reappointed as external auditor and the audit committee would not put the role out to tender. Months later Luminar back-tracked and announced it wanted a “fresh audit relationship”. On the recommendation of the audit committee it appointed KPMG.
