The auditors to
collapsed tour operator XL Leisure are to be investigated by the profession's disciplinary watchdog after a request from the UK's largest accountancy institute.
Cameron Scott, executive counsel at the Accountancy and Actuarial Discipline Board (AADB) is to examine the conduct of BDO Stoy Hayward in relation to its audit of the accounts of XL Leisure for the year to October 31 2007. It is doing so after a referral from the Institute of Chartered Accountants of England and Wales.
The AADB has the authority to investigate company directors if they are members of qualifying accountancy bodies although none of the directors of XL are believed to be qualified accountants.
While there is nothing to suggest directors acted improperly, administrators from Kroll must shortly submit a routine report on their conduct to the Department for Business, Enterprise and Regulatory Reform.
XL's 2007 accounts were signed off, without qualification, by BDO on May 23 this year. The balance sheet shows the tour operator had increased net assets from £19.6m to £44.2m by the year-end. Much of this balance sheet strengthening came as intangible assets almost trebled from £34.6m to £95.6m. This was more than enough to offset net current liabilities which rose from £8.1m to £59.3m.
The collapse of XL five weeks ago left about 80,000 UK holidaymakers stranded overseas, and disrupted the travel plans of many more.
The Civil Aviation Authority's Atol bonding scheme ensured some were returned home at no extra cost, but those who booked their trips with agents not operating within the scheme were forced to find their own way home.
Rival carriers profited from their predicament by hiking flight prices.
BDO issued a statement today saying it would be inappropriate to comment on the AADB investigation. It added: "XL airways operated in a volatile marketplace. The administrators for XL have previously confirmed that XL entered into administration having suffered as a result of unpredictable fuel prices, the economic downturn, and were unable to obtain further funding."
After just 15 months in the job, the XL chief executive, Peter Owen, resigned in June, forcing deputy chairman Phil Wyatt to take over day-to-day running of the company. Wyatt had led a management buyout in November 2006.