The UK's largest sandwich maker, Greencore, has axed three senior managers after discovering £15.8m worth of accounting fraud.
The Irish food group revealed that expenses and other costs had been deliberately concealed at the company's Mineral Water Strathlomond premises in Scotland, which led to a 'material misstatement' of financial performance for the years 2006, 2007, and the current financial year.
'The investigation indicates that this concealment of costs was undertaken by the former financial controller of the Mineral Water business who left the business prior to the concealment being uncovered. The three managers with direct supervisory responsibility for the former financial controller have left the business. A new managing director and acting finance director for the Mineral Water business have been appointed,' Greencore said in a statement.
Greencore's board believes this to be an 'isolated issue'. However it is conducting a thorough review (independently supported by KPMG) of all the Group’s businesses and of its internal control, financial reporting and external audit processes.
The result of the fraud is expected to lead to a restatement reducing the Group’s operating profit by €4m (£3.16m) for 2006 and by €8m (£6.33m) for 2007. In addition, the estimated impact of this issue in 2008 will be a reduction of operating profit of €9m (£7,12m).
The company added that since the issue was first identified, the Board made it a priority to move quickly to determine the cause, extent and impact of the concealment.
It then took steps which included an immediate investigation following meetings between the group finance and finance director at the Mineral Water premises, analysis of the last three years of accounts and identification of the concealed issues.
The audit committee and board have also met to review the analysis and to assess the situation.
The Group is taking legal advice on what, if any, elements of this financial impact can be recovered.
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