Erroneous Accounting Prompts Helphire to Take on KPMG
A recent restructuring in motoring company Helphire Group has unveiled an accounting error of up to £25 million in its accounts, prompting the board to hire KPMG accountants to investigate the matter.
Shares of the company sustained an all-time low 67 percent decline on Friday last week shortly after the discovery of the accounting error.
The error resulted in an overstatement amounting to £25 million according to South West England-based motoring company.
Helphire said in a statement that it has become aware of the “material overvaluation” after a “major restructuring of the business and its systems which the new management team and board have been carrying out since 2009.”
The overstatement was found in “the carrying value of ABI debtors in the financial systems” which could not be reconciled with the “underlying operating systems.”
Around 15 percent of Helphire’s receivables at the end of 2010 are being reflected by the possible £25 million accounting error.
KPMG tax specialists will look into the cause of the error. But the company said the issue won’t affect the settlement of claims and its cash position.
Meanwhile, Helphire expects a “significantly below market expectations” revenue until June.
In a second full-year profit warning released late last week, Helphire blamed rising petrol prices for the reduction in its hire length and the “lower road miles being driven, resulting in lower accident rates.”
As people began using its cars less, trading conditions have become tougher, Helphire said in a statement.
Reuters quoted Helphire’s chief financial officer as saying that the company has “experienced a hire length below 20 days over the recent few weeks. And that’s because there are fewer incidents; body shops are not repairing as many vehicles and therefore they are able to turn vehicles around much quicker.”
According to the Association of British Insurers, motor claims fell by 8 percent last year.
Founded in 1992, Helphire has been supplying replacement vehicles to car owners involved in non-fault accidents.