Company which supplies carpets to the Royal Family is at risk of fraud with ‘potential irregularities’ regarding some transactions, auditors warn

A company that supplies carpets to the Royal Family is at risk of fraud, auditors have warned.

Concerns about a subsidiary of Victoria, which dates back to 1895 and holds a Royal Warrant, were flagged in a financial update.

Auditors Grant Thornton said there were ‘risk factors of fraud’ as well as ‘potential irregularities’ regarding certain transactions.

The audit firm also referred to ‘instances of non-compliance’ with regulations covering ‘money laundering’ and ‘terrorist financing’.

The warning, in a report for the year ending April 1, focused on Victoria’s Yorkshire-based Hanover Flooring brand.

Grant Thornton’s said that Victoria constrained its inquiries by the imposition of a so-called ‘limitation of scope’ on part of the audit.

In a statement, Victoria said the issue was ‘predominantly one of having heightened financial risk due to inadequate accounting records’.

This was ‘a situation that is regularly found when smaller businesses are acquired as their standard of financial controls and record keeping often don’t match the high levels we have across the rest of the group,’ it added.

The company went on: ‘Not surprisingly, we’ve identified the issues, allocated additional finance resources, and are putting appropriate controls in place and the issue is not ongoing. There is no wrongdoing at Hanover and nor are the auditors alleging this.’

Victoria supplied the red carpet used for the wedding of Prince William and Kate Middleton in April 2011 

It was granted a Royal Warrant to the late Queen in January 2013

Victoria also disputed the auditor’s claims that the issues were ‘qualitatively and quantitatively material’ to its financial statements.

It said the amount of transactions for which inadequate records existed made up less than 0.08 per cent of revenues. Victoria acquired Hanover Flooring in January 2021.

The news affected Victoria’s shares, which are listed on the London Stock Exchange. Its share price closed down 3.2 per cent yesterday, after it recovered from falling as much as 25 per cent in morning trading.

Under its main Victoria Carpets brand, the Worcestershire-based company has supplied the Royal Family for years.

Victoria supplied the red carpet used for the wedding of Prince William and Kate Middleton in April 2011. It was granted a Royal Warrant to the late Queen in January 2013.