GREENCORE HAS dispensed with the services of its external auditors PricewaterhouseCoopers (PwC) following a €21 million fraud at its Campsie Mineral Water business in Scotland. It has appointed KPMG in its place.
The "deliberate concealment of costs" at the business went undetected for two years, leading to a "material" mis-statement of the unit's financial performance in 2006, 2007 and the current year.
When the fraud was revealed in June, Greencore's share price plunged almost 15 per cent, with chief executive Patrick Coveney describing the incident as "a real blow". Operating profits for 2006 were cut by €4 million, the 2007 outcome was cut by €8 million and the estimated impact for the year to September will reduce operating profits by €9 million.
The loss of the Greencore contract will cost PwC around €800,000. PwC received remuneration for this amount and a further €16,000 in non-audit fees from Greencore in the year to September 2007. The company received remuneration of €829,000 and €150,000 in audit-related fees in the previous year.
Greencore said yesterday it was satisfied that the fraud, which led to the sacking of three senior managers, was an "isolated incident". A review by KPMG of the group's financial and internal controls has not identified any other problems.
KPMG has examined 20 of its manufacturing sites, comprising 80 per cent of Greencore's sales, with the remaining sites due to be reviewed by mid-September.
This is not the first time KPMG has replaced PwC as auditors of a major Irish company. In 2002, AIB chose KPMG to replace PwC after the €777 million fraud at its US subsidiary Allfirst.