UK: Accounting irregularities cloud Ford Kwik-Fit sale - reports
Accounting irregularities have been discovered at Ford’s UK Kwik-Fit operation while auditors readied the fast-fit parts and tyres chain for sale, according to the Financial Times.
Having bought Kwik-Fit in 1999 for £1 billion ($US1.6 billion), Ford is now expected to get just £300m for the operation, substantially less than the £800 million once hoped for.
Other UK reports citing the FT say that the accountants PriceWaterhouseCoopers found that suppliers’ goods were not being offset against profits because invoices had not been received.
That understated liabilities and boosted profits by about £3.4 million.
The problems surfaced in December after Ford asked the accountants to fully investigate and the losses relate to the financial year that ended on 31 December 2001.
Reports say that Kwik-Fit founder Sir Tom Farmer, who set up the chain in 1971, was said to be unaware of the irregularities.
The reports said that struggling Ford, in the midst of major restructuring, has already taken a loss of $US700 million in its last set of accounts on the potential sale of Kwik-Fit and was hoping to sell the company to a private equity firm.
The reports said the value of Kwik-Fit, the UK's largest independent car-repair firm with 1,900 branches, has also been affected by decline in the European car repair market as the economic slowdown continues.
Along with today’s news of an apparent NatWest bank link to the Enron accounting scandal, and this week’s WorldCom bombshell, the Kwik-Fit news is bound to fuel suggestions that accounting scandals affecting the US will spread to the UK.