The accounts for Birmingham City’s stricken parent group have been delayed indefinitely – and its auditors have resigned.
The turmoil surrounding Birmingham International Holdings (BIHL) intensified after Birmingham-based BDO wrote to the Far East group revealing its decision in strongly-worded fashion.
Announcing the decision to the Hong Kong Stock Exchange, BIHL said BDO had complained of being unable to obtain “consistent, reliable and complete audit evidence”.
The announcement added that BDO had “reservations on the effectiveness of corporate governance and the system of internal controls” at BIHL.
The resignation is the latest embarrassment for Blues’ owners, who have repeatedly delayed publication of the parent company’s accounts for the year ending June 30, 2011 and now have a second year’s worth of results outstanding.
BDO revealed in June that they had not received all relevant information over the football club’s £10 million losses for last season.
Blues are also the subject of takeover talk amid reports that Solihull-based businessman Gianni Paladini is among a number of contenders from around the world vying to buy the club.
The latest update was revealed to the Hong Kong Stock Exchange by BIHL chief executive Peter Pannu. He was already Blues’ acting chairman when he was appointed to the role on September 19.
In his announcement, Mr Pannu said BIHL officials were “actively seeking” new auditors.He continued: “Since the appointment of the new managing director on September 19, 2012, immediate attempts were made to take the audit forward.
“A meeting with BDO and the audit committee was called on September 21, 2012 to address in detail the audit issues raised by BDO in their letter dated September 12, 2012.
“This was followed up by a formal reply to BDO on October 19, 2012 updating the auditor on the outstanding issues and further a detailed e-mail was sent from the managing director to BDO dated October 27, 2012 attempting to further bridge the audit gap with the auditor and to narrow down the audit issues.
“As a result of the resignation, the company is actively seeking the appointment of a new auditor and therefore it will be unable to publish its annual results for the year ended June 30, 2011, interim results for the six months ended December 31, 2011 and annual results for the year ended June 30, 2012 by October 31, 2012.”
BDO said at the time of the publication of Blues’ accounts: “A number of factors have made us sceptical as to whether we have received all relevant information and explanations necessary for the audit from the directors.
“These factors include during the audit process an individual director made comments in writing about certain transactions reflected in the financial statements that indicated concern as to the integrity of these transactions and their recording/or disclosure in the financial statements.
“We have not been provided with sufficient and appropriate evidence that the board of directors have formally considered and resolved as necessary the issues relating to these comments or that these comments have been withdrawn by the individual director.”
The auditors went on to claim that “significant payments” that might have been related to the group were “not disclosed in a timely fashion”.
“These payments have now been agreed to be recorded in the accounts of the parent company,” BDO said.