Raymond Doherty 3 Jan 2018 10:01am

Accounting scandal deepens for Steinhoff

The accounting irregularities at scandal-hit Steinhoff International could be worse than feared, the company has admitted

In a statement to the stock exchange yesterday, the group, which owns Poundland as well as 6,500 retail outlets and 40 brands worldwide including Bensons for Beds and Harveys in the UK, revealed that its 2015 and 2016 financial statements would also need to be restated and “could not be relied on”.

In December, South Africa’s audit regulator announced a probe into Deloitte over the scandal. The investigation of the Big Four firm, which has audited Steinhoff for almost 20 years, concerned the financial years ended 2014 – 2016, the Independent Regulatory Board for Auditors (IRBA) said.

Earlier the same month, Steinhoff appointed PwC to conduct an independent review into the accounting irregularities. The company said new information had emerged which required investigation and added that it had been unable to publish its financial results as a result.

Its chief executive Markus Jooste then stood down with immediate effect. Shares in the company have since plunged over 80%.

The statement from the company read, "Whilst the internal review and investigation into the accounting irregularities have not yet concluded, the restatement of the financial statements of Steinhoff International Holdings Proprietary Limited for years prior to 2015 is likely to be required and investors in Steinhoff are advised to exercise caution in relation to such statements."

This is the second major accounting scandal to rock a Big Four firm in South Africa in recent months, after KPMG had to replace its entire leadership and lost a number of clients over its ties to the Gupta family.