Page 14 - Auditors Article

a moratorium is placed on the company, meaning that the

company’s creditors cannot start insolvency proceedings, or
take legal action against the firm once the procedure has been

implemented.

When a firm is going into administration, the procedure and

the company are managed by the administrator, whose goal is
to restore the company to profitability if possible.

On 22 January 2019, Patisserie Valerie announced that it had

failed to secure an extension to its lending facilities and that it

was to enter administration. Patisserie Valerie was the latest
U.K. high-profile company to collapse because of fraud and

inaccurate data. The case raises some of the same issues as

the failure of companies such as Carillion, namely:

1. Quality of the audit work performed by the external

auditors.

2. Lack of strong internal controls.
3. Poor governance.

The role of the administrators in the short term is to try

and secure the future of some part of this business, save jobs,
and realise funds for the credit of the company (See Diagram 2)