FRC launches member investigation after Redcentric misstatements

The Financial Reporting Council has commenced a disciplinary investigation into one of its members regarding the accounting misstatements at Redcentric revealed last year.

The beleaguered IT services business, based in Harrogate, revealed accounting issues that saw the company’s assets overstated by “at least £10m”. Chief financial officer Tim Coleman left the business and the company has been struggling to salvage the situation ever since.

Now, the FRC has an individual in its crosshairs, though it did not name the person who will be in the spotlight during the investigation.

In February 2017, the FRC announced it had commenced an investigation into the conduct of PwC and their audit of Redcentric for the preceding two years.

Redcentric’s 2015 accounts were signed off by Jaskamal Sarai and in 2016 by former head of PwC’s Yorkshire office Arif Ahmad.

Redcentric has been scrambling to rectify the situation since the misstatements were revealed in November 2016.

Julian Llewellyn was initially appointed as interim chief financial officer, followed by permanent replacement Peter Brotherton.

Later that month, Redcentric signed on Deloitte and Nabarro to complete a forensic review following the discovery of accounting misstatements, and in March the FRC waded in after having already announced an investigation into PwC the preceding month.

Despite the “challenging” period, it announced that for the year to 31 March 2017, revenues reached £104m, up from the restated £102m in 2016. Pre-tax losses narrowed to £4.2m, from £6.1m the year before.