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Wed 9th Mar 2022 - KPMG fined £875,000 for Revolution audit failings
KPMG fined £875,000 for Revolution audit failings: KPMG has been hit with another fine from the accountancy regulator for failings in its audit division. The Times reports that the accountancy giant has been severely reprimanded by the Financial Reporting Council and levied with a £875,000 fine for breaching standards in its audits of Revolution Bars, the cocktail bar and restaurant group. Mistakes by KPMG auditors working on Revolution’s accounts for the 2015 and 2016 financial years meant the audits “failed to achieve their principle objective of providing reasonable assurance that the financial statements were free from material misstatement”, the watchdog said. Multiple misstatements later had to be corrected. Some of the errors made by KPMG related to their treatment of supplier rebates and listing fees, share-based payments and deferred taxation. The errors relating to supplier rebates and listing fees were made despite the regulator warning in 2014 and 2015 that such complex arrangements were particularly risky and would be a focus of its annual spot check of audit quality. Revolution, which has 67 venues, listed in March 2015 at 200p a share. The stock has since fallen by nearly 90% to a little over 18p. Jamie Symington, deputy executive counsel to the FRC, said: “The audit client was a newly listed and relatively small company, but the breaches were nevertheless serious, including lack of professional scepticism.” In a statement, KPMG said it regrets that aspects of its Revolution audits “fell short of required standards”.

Propel to launch fourth exclusive database – the UK Food & Beverage Franchisor Database: Propel’s Premium subscribers will be given exclusive access to a new database early next month. The UK Food and Beverage Franchisor Database will be an exhaustive guide to the companies offering a food and beverage franchise in the UK. The first edition will feature more than 100 companies, providing insight on the offer, locations, cost and other key details. The first edition provides almost 25,000 words of content. Propel managing director Paul Charity said: “The world of food and beverage franchise in the UK has become increasingly sophisticated in the past few years. We now have more than 100 food and beverage franchises available in the UK – and more popping up every month. These franchisors include international companies offering franchises within the UK – but also an increasing number of UK-based franchises. Our database is the UK’s first dedicated guide to this increasingly important franchise universe – and an updated version will be available every two months.” Meanwhile, the next edition of Propel’s Turnover & Profits Blue Book, produced in association with Mapal Group, shows the effects of the pandemic, with total losses of £7.6bn being reported by 350 companies. However, a further 198 sector companies are still reporting total profits of £828.9m. The next edition will include 548 companies, an increase of 12 companies compared with the February edition. The 548 companies produce total turnover of £25.9bn. The next edition of the Blue Book will be sent to Premium subscribers on Friday, 18 March, at midday. The Blue Book, which is updated every month, provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Premium subscribers also receive two other databases – the New Openings Database, produced in association with StarStock, and the Multi-Site Operators Database, produced in association with Virgate, which are also updated each month. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription. Subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews and now also have access to a curated video library of the sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out; regular video content and regular exclusive columns from Propel group editor Mark Wingett.

Pressure mounts on KFC to shutter its 1,000 Russian restaurants: KFC faces mounting pressure to shutter its 1,000 Russian restaurants after McDonald’s, Coca-Cola, Pepsi and Starbucks all halted business there indefinitely because of Russia’s invasion of Ukraine. The chain is the only significant US-owned fast-food chain still operating in Russia, after its rivals announced plans to suspend business there indefinitely. KFC is owned by Yum! Brands, which also operates 50 Pizza Hut locations across Russia. Pepsi, one of the first Western products that was allowed in the former Soviet Union, will no longer be sold in Russia, said PepsiCo, which will continue the sale of essential items such as baby formula. Coca-Cola, which has a huge presence in Russia through a licensed partner that operates ten bottling plants there, said in a statement that it is suspending all business there. Starbucks chief executive Kevin Johnson also confirmed in a note to global staff that the coffee chain would be closing its 130 locations in Russia and halting all sales, but continuing to pay its 2,000 employees there. All the shuttered cafes are run by licensed owner-operators, rather than by the Seattle-based business. Meanwhile, McDonald’s also said it will close its 850 locations in Russia, but continue paying its 62,000 employees there “who have poured their heart and soul into our McDonald’s brand”. None of the brands who have pulled out have given any indication as to when they may resume business. In a statement to the Daily Mail, Yum Brands said that it is suspending all investment and development of new restaurants in Russia, and that it will donate all profits from operations in Russia to humanitarian efforts. “Like so many across the world, we are shocked and saddened by the tragic events unfolding in Ukraine,” a Yum Brands spokesman said. But so far the company has resisted calls to close restaurants in Russia, which include about 1,000 KFC locations and 50 Pizza Huts. Most of those locations are operated through franchise or licensing agreements, which may complicate the company’s ability to shut them down.

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