Page 5 - Auditors Article

The first Patisserie Valerie store was opened London in 1926.

Its swift expansion took place after Luke Johnson bought into
Patisserie Valerie in 2006 when it had eight stores. Johnson

grew the business and in 2014, it was listed on the AIM stock

market for small companies and at its demise in 2019

employed some 3,000 people. [Gallagher, J., 2020]

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Up until 10 October 2018, Patisserie Holdings gave every sign
that it was a profitable company making good profits and

expanding well (see Table 1). Its chairman, Luke Johnson
trusted the figures supplied to him by his Chief Financial

Officer, Chris Marsh, and believed the auditor who gave the

company a clean bill of health. Moreover, any questions he did

raise were satisfactorily answered.

The 10 October 2018 saw the firm announce that its board
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had become aware of an HMRC winding-up petition against its

principal subsidiary Stonebeach, with the tax body seeking a

payment of £1.14m. It also discovered the frightening level of
fraud in its accounts and suspended its CFO. The result was

that Patisserie Holdings plc was insolvent and could no longer

be considered a going concern. It needed a cash injection

which Johnson provided but to no avail. The rapidity of its
subsequent demise was breath taking. As Johnson

commented the fall of his firm was "horribly rapid".