8:50 am, August 25, 2023
A franchised car dealership which found a £3.7m stock discrepancy in its accounts has officially appointed administrators.
Last week, Car Dealer reported that CMS Kidderminster had called in professional advisers after directors found an unexplained discrepancy of £3,689,292 in its latest accounts.
The irregularity, which bosses were unable to reconcile, was in relation to a stock contra account at the new and used Vauxhall dealer.
Now, the firm appears to be fighting for its future, having been placed in administration.
Tony Wright and Rajnesh Mittal, of specialist firm FRP Advisory, have been appointed joint administrators and given the brief of exploring options for the future of CMS.
The pair will now consider whether the business will need to be sold in order to survive and protect the jobs of all 46 members of staff, who currently remain employed by CMS.
Tony Wright, partner at FRP Advisory, said: ‘Our appointment provides some stability for CMS and enables the business to continue to trade, supporting both employees and customers.
‘We are working through our options and are considering the prospect of a sale process to protect the future of CMS. We encourage any interested parties to come forward.’
CMS’s issues began with the publication of its annual accounts for the year ending December 31, 2021.
The documents state that the Vauxhall dealer made a pre-tax profit of £487,475 following a £79,295 loss the year before.
That was on a turnover of £94.3m versus £83.5m in 2020. It received £36,794 and £195,838 in government grants in 2021 and 2020 respectively.
But in the accompanying strategic report, under a section entitled ‘Stock discrepancy’, the board says that before the 2021 year-end audit, the directors found ‘un unexplained discrepancy of £3,689,292 in the accounts in relation to a stock contra account that they were unable to reconcile as at 31 December 2021’.
The report adds: ‘The directors are continuing to investigate the stock difference and have engaged with professional advisors in order to determine the proper accounting treatment.
‘The directors are also working to ensure that the systems and processes ensure that no such issue could occur again.’
