Auditors for one of the North East’s most prominent developers resigned after encountering a string of difficulties in compiling the company’s accounts, new documents reveal.
Accountants PwC stood down as auditors of High Street Group – the developer behind Hadrian’s Tower in Newcastle – saying that it had not been able to obtain the information needed to complete a reliable audit on the company.
PwC outlined internal issues with the company’s systems and said that delays from management had created a “pervasive” situation that forced its resignation.
Though best known for creating Hadrian’s Tower, Newcastle’s tallest building, High Street Group is also leading an office, hotel and housing development close to the city’s St James’ Park and prominent riverside housing schemes on both sides of the Tyne.
But it admitted it had suffered major financial problems last year when institutional investors pulled financial backing during the pandemic.
The company’s 2018 accounts were eventually published in January – more than a year late – and saw the company being censured by Haines Watts, which took over as auditors after PwC’s resignation.
The letter from PwC says: “The reason we are ceasing to hold office is that, 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.
“Management has failed to provide accurate and timely explanations in response to recent specific questions nor has complete evidence been provided in response to those questions.
“There have been delays in the provision of information to us for an extended period, which has prevented us from completing our testing. Further, the information has not been of the required quality, despite discussions with management which leaves us unable to reach a conclusion on our testing.
“Due to the pervasive nature of these issues, we are unable to fulfill our professional oblibations for the year ended 31 December 2018 and are unable to continue to hold office as auditors.”
High Street Group, which is led by Gary Forrest, is behind a number of high profile development schemes around the country, including projects in Manchester and Birmingham. It also has a leisure division that runs a number of bars, restaurants and hotels in the North East.
The company said in February that it had suffered difficulties after the Financial Conduct Authority (FCA) allowed investment groups to suspend lending during the coronavirus pandemic.
But it insisted that funding arrangements were now returning and said its development projects were “back on track”.
The company’s 2019 accounts are more than three months late but the company has indicated they will be published soon.
A spokesman for High Street Group said: “PwC were only engaged for one audit, Haines Watts have picked up the work and confirmed that adequate accounting records were in place enabling them to deliver the accounts within three months.”