Former High Street auditor slams group governance
Internal controls were not “sufficiently robust” to enable accurate financial reporting, said PricewaterhouseCoopers, which resigned from auditing the Newcastle-based developer’s accounts leading it to appoint a different firm.
In a letter to High Street Group chairman Gary Forrest, dated September 2020 but only uploaded to Companies House in the past week, PWC said set out the reasons it ceased holding office as the group’s auditor last year.
“Since our appointment we have obtained information that leads us to conclude that the company’s control environment is not sufficiently robust to enable us to obtain reliable audit evidence,” the letter said.
“Management has failed to provide accurate and timely explanations in response to specific questions, nor has complete evidence been provided in response to those questions.”
The letter continued: “There have been delays in the provision of information to us for an extended period…Further, the information has not been of the required quality despite discussions with management in this regard, which leaves us unable to reach a conclusion on our testing.”
PWC was hired to audit High Street’s financial accounts for the year ended 31 December 2018, which remain overdue along with the next accounts for the year ended 29 December 2019, according to Companies House.
After PWC’s departure, High Street appointed local North East accountancy practice, Haines Watts, which it says is close to filing the 2018 accounts.
A spokesperson for High Street Group said: “PWC was only engaged for one audit. Haines Watts has picked up the work and confirmed that adequate accounting records were in place enabling it to deliver the accounts within three months.”
The group declined to provide further comment on PWC’s stated reasons for its departure.
The spotlight has been on High Street in recent months following a High Court battle involving one of its subsidiaries, High Street Rooftop Holdings, which subsequently collapsed into administration last September.
Administrators at FRP Advisory were appointed to the company, which specialised in developing residential units on rooftops, mainly in London, following a legal dispute with one of its creditors over High Street Rooftop’s failure to repay around £20m in loans from Korean backers.
According to court documents, Forrest had suggested to his backers that the loans be redeployed to other High Street Group residential schemes, including the £29m Middlewood Plaza in Salford and three projects outside the North West.
The court case and administration cast uncertainty over High Street’s real estate projects including the 127-unit Middlewood Plaza, which it is developing through a special purpose vehicle called Rodus Developments.
A High Street spokesperson told Place North West that the private rented sector project was on track to complete this month and that the administration had had no impact on the wider group finances. Construction is understood to still be on schedule, but the spokesperson was this week unable to supply further details.
High Street’s other North West interests include Anchorage 3 and 4 at Salford Quays, which the group intends to redevelop into a 130-apartment office-to-residential scheme, and a joint venture with Logik Developments to deliver a £100m, 355-apartment scheme at Arundel Street in Manchester’s Castlefield.
Meanwhile, in Warrington, High Street’s £48.7m Cheshire Junction – an eight-storey block of 362 apartments on John Street – has been delayed as the group reviews its delivery programme, Place North West reported in February.
An earlier version of this story incorrectly stated that Middlewood Plaza was part of a wider masterplan for Scarborough Group International’s Middlewood Locks project. We are sorry for the mistake.