Accountants’ watchdog bans iSoft scandal pair
THE accounting watchdog has banned two former top executives at health software firm iSoft for eight years over a financial reporting scandal.
Former finance director and then chief executive Tim Whiston from Lymm and ex-finance director John Whelan from Cheadle, admitted to the Financial Reporting Council that their conduct fell significantly short of the standards expected of members of the Institue of Chartered Accountants in England and Wales.
Both men were previously cleared of criminal wrongdoing at a trial in London in 2013 after a case against them and other directors of the one time high-flying Manchester FTSE 250 company collapsed.
In the hearing brought by the FRC the pair admitted “recklessly causing or permitting iSoft” to recognise £22m of revenue from an unsigned Irish health service contract, and four other similar breaches relating to the company’s accounts. The pair also misled auditors Robson Rhodes.
Settlements between the FRC and Mr Whiston and Mr Whelan involved them both agreeing to be excluded from the ICAEW for a recommended period of eight years, and Mr Whiston also agreed to pay £50,000 to help pay the institute’s costs.
In a statement John Whelan said : “I am pleased to be able to draw a line under this whole affair with the FRC’s investigation confirming that there is no suggestion of any dishonesty on my part. Faced with the prospect of a further hearing in 2017 or reaching an agreement, I decided that it was in the interest of all parties to bring the affair to a conclusion and, as a consequence, agreed to this settlement.
“I was a director of iSoft for only eight months and left the company in 2004. After being acquitted and found not guilty in a court hearing, once it was established that the FSA had misled the jury, and amidst contradictory witness evidence, I remain understandably aggrieved (not least about the waste of public money) but recognises that I should now look to the future and concentrate on more productive matters.”
iSoft, originally based in central Manchester and then on a business park next to Manchester Airport, was a major supplier to a multi-billion pound NHS IT contract.
It floated in 2000 and in five years its market value hit £1bn. The wheels came off in 2006 when the company issued a dramatic profit warning after discovering “accounting irregularities” affecting several previous years figures. Its share price nosedived and the company was bought by Australian rival IBA Health in 2007.
In 2010 the regulator issued an eight-year ban on a former iSoft financial controller who later helped blow the whistle on the accounting scandal.
The group’s auditor, RSM Robson Rhodes, now part of Grant Thornton, also faced sanction for failing to make proper checks before signing off iSoft’s financial statements. It was fined £225,000.
