Page 34 - Patisserie Valerie Teaching Note

Even if it were not be the auditor's job to spot fraud, it was

their job to ensure that the £28m bank balance shown on

Patisserie Holdings balance sheet bore some semblance of

reality and was not actually a £10m overdrawn balance.

It is clear that management didn’t have an understanding of

the scope and scale of the problems the business was

facing.

Dunckley commented to the BEIS: “If people are colluding
and there is a sophisticated fraud that may not be caught by

normal audit procedures.” (D)

Given the size of the company and the amount of

misstatement of the accounts it is unlikely that the

perpetrators of the fraud could have achieved the levels of

misstatement in a short period of time. It is more likely that

it took between one and two years. This alone, questions

the professionalism of the auditors in carrying out their

duties.

In 16 January 2019, Patisserie Valerie provided a company

update announcing that:

“The work carried out by the Company’s forensic

accountants since [10th October 2018] has revealed that the

misstatement of its accounts was extensive, involving very

significant manipulation of the balance sheet and profit and

loss accounts. Among other manipulations, this involved

thousands of false entries into the Company’s ledgers.”