UK regulator Financial Reporting Council (FRC) has started an investigation into the audits of British cake restaurant chain Patisserie Valerie.
The investigation is being carried out under the Audit Enforcement Procedure to promote transparency and integrity in the business.
The audit was conducted by Accountancy firm Grant Thornton UK for the years ended 30 September 2015 to 2017.
Last month, the company’s directors confirmed that the group has a net debt of approximately £9.8m, which was spent using overdraft facilities with Barclays and HSBC.
Patisserie Valerie’s finance director was arrested after the company announced the significant, and potentially fraudulent, accounting irregularities of more than £20m.
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Under the investigation, FRC will focus on setting auditing and ethical standards as well as monitoring and enforcing audit quality.
The independent body is also investigating the ‘preparation and approval’ of financial statements and other financial information by the former chief financial officer Christopher Marsh.
An FRC spokesman noted that the organisation could spend up to two years to complete the investigation, according to The Guardian.
A Grant Thornton spokesman was quoted by the news website as saying: “I can confirm we have received a letter from the Financial Reporting Council informing us of its decision to commence an investigation, and we will, of course, fully cooperate in this matter.”
Following the completion of the investigation, FRC will decide on filing a case to a tribunal against Grant Thornton and Marsh.
Earlier this month, Patisserie Valerie CEO Paul May resigned from his role effective immediately.