With respect to amounts owed by group undertakings, included in the Balance Sheet, having a carrying value of £115,119,758 which includes the reversal of an impairment amounting to £50,709,219, the audit evidence available to support the recoverability of this balance was limited to the net assets per the 31 December 2023 audited financial statements of the counterparty.
However, the audit opinion on the financial statements of the counterparty includes a qualification pointing to the inability to obtain sufficient audit evidence regarding:
- Investment Property: The counterparty’s investment property with an opening balance of £39,600,000, a revaluation surplus of £65,400,000 reclassification from property development of £3,407,572 and a closing value of £108,407,572.
- Deferred Tax: The related deferred tax liability amounting to £6,076,893.
- Related Party Loan and S455 Tax: The inability to obtain sufficient and appropriate audit evidence regarding the net wealth of a related party associated with one of the company’s directors, including a loan of £18,155,000 to parties associated with the directors, and the amount of £5,900,000 included within other debtors of the counterparty, relating to S455 tax, which will only be recoverable when loans due from related parties are repaid in full.
The qualification in the counterparty’s audit opinion directly impacts the amounts owed by group undertakings per these financial statements, which means we are unable to verify the recoverability of the carrying value of these amounts. As a result, we are unable to determine whether any adjustments to the carrying amounts of these balances are necessary. Consequently, the balance sheet position and profit for the year could be significantly misstated, potentially resulting in an overstatement of the company’s financial standing.
Furthermore, qualified audit opinion regarding the comparatives with respect to the amounts owed by group undertakings, which amounted to £45,301,000. The same limitations on audit evidence regarding the recoverability of these balances apply to both the current and comparative periods, and our opinion for the current year (2023) is similarly qualified.