Deloitte sparks iSoft investigation
Deloitte raises serious concerns over the accounts filed by iSoft in previous years
The internal investigation into accounting irregularities at iSoft was
instigated by auditors Deloitte after the accounting firm raised serious
concerns over the accounts filed by the company in previous years.
The issues raised by Deloitte may see the IT company reported to the
Financial Reporting Review Panel and forced to restate earlier figures. This is
the first time that Deloitte have audited iSoft’s final year accounts.
iSoft overhauled its accounting policies in June after receiving intense
criticism from analysts for using an off-balance sheet credit facility and
recognising revenues imprudently early. The policy change saw iSoft downgrade
profit forecasts from around £22m to £7m for 2005/2006.
Following the exchange, Deloitte began to work through iSoft’s previous
accounts to align earlier numbers with the new accounting policy. It was during
this process that Deloitte raised the issue of possible accounting
irregularities.
‘Deloitte went back through the results for several years because of the new
accounting policy, which is when they uncovered several things that were not as
they should be,’ a spokesman said.
A committee led by iSoft’s finance director Gavin James has been
investigating the possibility of accounting irregularities.
The matter has not been reported to the FRRP because the committee still has
to establish the seriousness and materiality of the concerns.
iSoft’s stock has plummeted 84% since the start of the year. The group has
postponed its final results and is in talks with its banks.