PracticePeople In PracticeE-district retains auditor.

E-district retains auditor.

The online video company announced in February that financial irregularities had been found. A investigation, completed this week, revealed the overstatement, which it blames on former chief executive Steve Laitman and two other senior managers.

It has notified the Fraud Squad and is suing Laitman for damages.

A spokeswoman explained that the scandal stemmed from a scheme that could have been overlooked by an auditor: ‘There was fabrication of evidence, it was very difficult to spot. I don’t know of any plans to get rid of PwC.’

She explained the inflated revenues were mostly in advertising, and were all backed false invoices.

‘Because there was concrete evidence that looked official, everything tied up and the money was coming in, nobody thought to question the figures,’ she added.

The irregularities were discovered when finance director Eddie Abrams chased up an overdue invoice. The spokeswoman said: ‘He actually discovered the irregularities. The FD is not seen as responsible.’ Abrams, who is also chief operating officer, is involved in the company’s new business plan. E-district will be looking for a new chief executive when the plan is up and running.

The company confirmed it had been contacted by a legal firm representing shareholders, but said it was not aware of any formal legal action.

PwC said it had nothing to add to its audit report.

More at: www.accountancyage.com/Business/1117962.

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