Mar 18, 2015

Manchester Building Society Sues Grant Thornton for £49m

The accountants are accused of negligence over their auditing of the building society's accounts between 2006 and 2013.

"The claim primarily covers Grant Thornton's advice and audit services relating to the implementation and application of hedge accounting by the society," said the building society.

The building society claims that the accountants had given poor and incorrect advice on how to account for interest rate swaps which are a type of deal between banks, building societies and other financial organisations.

As a result of this poor and incorrect advice, the building society says it had to restate its 2011 results which turned a small profit into a loss of £21.9m.

As a consequence of the restatement, the building society had to raise £18m to secure its finances in April 2013.

Via a spokesman Grant Thornton commented on the claims that: "As a large professional services firm, there are inevitably occasions where we become involved in legal claims."

"Naturally, our obligations of confidentiality mean that we cannot comment on the detail of any litigation in which the firm is involved."

The matter is also being investigated by the Financial Reporting Council, which regulates accountants.  The FRC investigation started in August 2013 and is ongoing.

The building society concluded that, "If the society is unable to reach satisfactory agreement with Grant Thornton the matter will progress to a court hearing."

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