Investigation hampered by ‘severe accounting deficiencies’
Poor record keeping means administrators have not been able to identify who is entitled to £755,000 from the client money account of collapsed real estate broker Allanfield Group.
Forensic accountants hired by administrators FRP Advisory were unable to reconcile the broker’s client money account with its financial records without incurring “significant” costs for the work, a report by FRP reveals.
FRP drafted in Crowe Clark Whitehill after neither they nor Allanfield’s former external accountants could fully identify the beneficiaries of the client account money because of incomplete records.
FRP Advisory partner Jason Baker wrote in the administrator’s progress report that the client money had not been not reconciled before the administration.
He added: “I am continuing my investigations in this regard, which have been materially hampered by the poor record keeping and the severe deficiencies in, or outright absence of, the company’s accounting records.
“Dealing with the client account has been a material area of work in the administration to date and continues to be. Significant time has been expended in dealing with this issue.”
Baker also said that his investigations included “proportionate investigations into what assets the company has, including any potential claims against directors or other parties and what recoveries could be made”.
As well as looking into the broker’s client money FRP were hired to investigate the failure of the broker.
The High Court has granted FRP an extension until December 2015 to complete its investigation.
FRP is also asking the court for direction on who is entitled to the client account monies, depending on whether the client trust is no longer valid or remains intact.
Coutts Bank is owed £2.6m through a credit facility that was granted to Allanfield, while former employees of the firm are still owed £32,600 for pay and holiday pay arrears.
In December 2012, the then AIM-listed broker appointed FRP after an eight-day share-trading suspension. Allanfield was forced to call in the administrators after it admitted it did not have enough cash to meet its liabilities.