The Financial Conduct Authority is to probe the accounting screw-up at Redcentric that was made public last autumn when the firm admitted to overstating assets and understating net debts by millions of pounds.
The London Stock Exchange-listed MSP said it made multi-year number crunching errors that saw net assets exaggerated by £20.8m and net debt closer to £42m than the £30m top brass had originally claimed.
The CFO quit after the revelation and Redcentric hired Deloitte and law firm Navarro to complete a “forensic review” of the finances, leading to changes to billing and credit control management systems, and the continued restructure of the accounting department.
Today the business confirmed to the City the FCA had “commenced an investigation following the historic overstatement of net assets and profits” and said management would “co-operate fully” with the regulator.
The audit of Redcentric by its accountant PWC is getting the rubber glove treatment from the Financial Reporting Council, which recently kicked off its own review of the processes for financial years 2015 and 2016. ®