Julia Irvine 14 Nov 2019 05:26pm

Mazars confirmed as Steinhoff auditor

Shareholders of embattled South African retailer Steinhoff International have given their backing to the appointment of Mazars Netherlands in place of Deloitte as auditor to the group

They voted 99.95% in support of the resolution, which was the only one on the agenda at the extraordinary general meeting yesterday in Amsterdam.

Relieved Steinhoff management welcomed the decision and said that the Dutch Mazars audit team would work closely with their colleagues in the UK, South Africa and France and in other jurisdictions where possible.

The retailer, which owns Poundland as well as 6,500 retail outlets and 40 brands worldwide including Bensons for Beds and Harveys in the UK, hit the headlines in December 2017 when it revealed that it had uncovered accounting irregularities. It said that its 2015 and 2016 financial statements would need to be restated and “could not be relied on”.

The company brought in PwC to investigate the accounts but what started out as a short term probe turned into a “significantly more complex” process than expected, with “multiple work streams operating across a number of jurisdictions”.

In March this year, Steinhoff announced that the PwC investigation had unearthed a $7.4bn (£5.76bn) accounting fraud, perpetrated by a small group of former executives and involving false transactions recorded over an eight-year period.

In a summary for investors at the time, Steinhoff said, “The transactions identified as being irregular are complex, involved many entities over a number of years and were supported by documents including legal documents and other professional opinions that, in many instances, were created after the fact and backdated.”

PwC added that the false transactions fell into four categories – profit and asset creation, asset overstatement and reclassification, asset & entity support, and contributions. The Big Four firm’s full 3,000-page report remains confidential for legal reasons.

The 2017 accounts were eventually published in May and showed an operating loss of $4bn. Steinhoff blamed the loss on write-downs amounting to €13bn (£11.2bn) following disclosure of the fraud.

Meanwhile, Deloitte, which audited Steinhoff for 20 years, is being investigated by South Africa’s audit regulator, the IRBA, over its audit work on the financial years ended 2014-16. 

The firm is also facing a number of lawsuits both in South Africa and the Netherlands.