XL's 'financial irregularities' emerge
Updated on 14 September 2008
The collapsed tour operator XL Leisure Group was warned of "financial irregularities" by its auditor almost two years ago, it has emerged.
In a strongly-worded resignation letter, accountancy firm KPMG claimed in October 2006 that it was blocked from investigating alleged misrepresentations by company directors that could have resulted in "material errors" in financial statements.
XL went into administration in the early hours of Friday morning leaving about 85,000 British holidaymakers stranded overseas.
Since then almost 12,000 people have been brought back as part of an airlift mission conducted by the Civil Aviation Authority.
The warning of potential financial irregularities at XL was made in a Companies House filed document dated October 16, 2006.
In the document KPMG explained why it had resigned as XL's auditor.
It stated: "We are no longer able to conclude that the financial statements give a true and fair view of the profit of the Company and its subsidiaries."
An investigation into arrangements between XL and a supplier concluded that information had been "misrepresented" to KPMG from "certain directors".
As a result "financial statements were likely to contain material errors", auditors concluded.
But they were blocked from investigating the matter further, leading to the resignation.
Some 200,000 people in total have seen future holiday plans go up in smoke as a result of the tour operator's collapse, although most will be compensated.
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