One of the UK’s biggest advisory firms, Deloitte, is under investigation by the UK’s accountancy watchdog in relation to its audit of fashion group Joules’ 2021 accounts.
Joules, best known for its colourful wellies and waterproof coats, called in administrators in November, putting 1,600 jobs and the future of its 132 shops at risk, after failing to secure emergency funding.
The company owed creditors, including HMRC, suppliers and staff, more than £100m at the time it collapsed, according to a statement of affairs issued by administrators.
In December, about 100 shops and 1,450 jobs were rescued from administration in a £41m deal led by the fashion and homewares retailer Next, which teamed up with Joules’ founder Tom Joule.
The Financial Reporting Council said it had opened an investigation relating to the audit conducted by Deloitte of Joules’ accounts for the year to May 2021. It did not state the focus of its investigation.
Joule launched the fashion retailer in 1989 by selling clothes at a country show in Leicestershire, and opened the brand’s first store in Market Harborough, Leicestershire, in 2001.
The business, which was listed on the junior Aim stock market in London until it called in administrators, had been struggling for months with falling sales. It has attributed the slower trade to the cost of living crisis and the UK’s dry and hot summer, which reduced demand for its posh wellies.
Joule made tens of millions of pounds from floating the company in 2016 and remained on the board as a non-executive director. He returned as an executive in September last year to try to lead a last-ditch turnaround.
A spokesperson for Deloitte UK said: “We will cooperate fully with the Financial Reporting Council’s investigation and remain committed to the highest standards of audit quality.”
Deloitte is also under investigation by the FRC in relation to the audit of the bus operator Go-Ahead, and was fined a record £15m in 2020 for failings in its audits of the software company Autonomy between January 2009 and June 2011.
