We were unable to obtain sufficient and appropriate audit evidence regarding the net wealth of a related party associated with one of the company’s directors. As such, we could not verify the recoverability of the following:
- A loan of £18,155,000 (Note 7) to parties associated with the directors.
- The amount of £5,900,000 (Note 7) included within other debtors, relating to S455 tax will only be recoverable when loans due from related parties are repaid in full.
In addition, the same matters were present in the comparative period (2022). Specifically, we are unable to verify the recoverability of:
- A loan of £16,066,000 to parties associated with the directors for the prior year (2022).
- An amount of £5,900,000 relating to S455 tax for the prior year (2022), which will only be recoverable when the related party loans are repaid in full.
Due to the absence of sufficient evidence supporting the recoverability of these amounts in both the current year and comparative period, we were unable to assess whether any adjustments to these balances were necessary. As such, the balance sheet position and profit for both the current year and prior year could be significantly misstated, potentially resulting in an overstatement of the company’s financial standing.
The financial statements reflect an 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 (Note 6) and related deferred tax amounting to £6,076,893. However, we could not obtain sufficient appropriate audit evidence to substantiate the fair value of the investment property as of the year-end date.
- The valuation was based on an external valuer appointed by the management, who agreed to the closing value of £105,000,000.
- Our independent external valuer, however, could not verify this valuation.
- We were unable to obtain an alternative reliable basis to support the valuation of the investment property at the year-end.
Additionally, we do not agree with the separate capitalization of property development cost of £2,609,651in the comparative figures, which we consider should have been accounted for as addition to investment property.