Accountancy regulators have launched a probe into the dramatic collapse of booze retailer and wholesaler Conviviality.

The Financial Reporting Council (FRC) revealed in a statement to the Stock Exchange that it has started an investigation into KPMG, Conviviality’s former auditors.

The probe will focus on the audit undertaken by KPMG on Conviviality’s results for the year to April 30, 2017. During the period, pre-tax profit surged 147% to £22.5m, on revenues of almost £1.6bn – an 85% surge year-on-year.

Although its investigation will centre on that audit, the FRC said it is also looking into the preparation and approval of Conviviality’s financial statements and other financial information by a member of the ICAEW.

Conviviality, which formerly owned the Bargain Booze and Wine Rack businesses as well as alcohol wholesalers Matthew Clark and Bibendum, tumbled into administration in April.

Sources close to the company told Retail Week at the time that an aggressive cost-cutting drive dominated – and ultimately hindered – its strategic progress as it sought to integrate the Matthew Clark and Bibendum businesses.

“The pressure to take cost out was enormous and they rushed at it like a bull in a china shop,” one source said of Conviviality’s “bungled” integration efforts.

Read more: The inside story of Conviviality’s dramatic collapse

Shares in the AIM-listed business were suspended when markets opened on March 14, and hours later Conviviality dropped the bombshell that it had “identified” a £30m tax bill which had apparently “not been accrued for within its short-term cash-flow projections”.

Conviviality attempted to raise £125m to “recapitalise the business” through a share placing, but failed to do so, and ultimately collapsed.

Food wholesaler Bestway saved the Bragain Booze and Wine Rack chains after snapping them up in a cut-price £7m deal in April, saving around 2,000 jobs.

The probe into Conviviality comes as the FRC also prepares to release its findings into the collapse of department store business BHS.

As previously reported, the retailer’s former owner, Sir Philip Green, had attempted to remove sections of the report after claiming it could damage his reputation.

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