The Serious Fraud Office has launched an investigation into accounting irregularities at recruitment and training company Corporate Services Group, audited until last year by Arthur Andersen, writes Philip Smith.
The investigation relates to 1997 and 1998 and, according to the company, involves historic accounting practices under previous management preceding a radical reorganisation of the board in the spring of 1999, including the appointment of new chief executive Peter Owen.
The irregularities came to light after new finance director David Lake took over the finance reins from Geoffrey Brailey in November 1998. Brailey subsequently resigned from the board in March 1999.
Prior to the shake-up the company had issued a number of profit warnings.
A spokesman for Andersens, now replaced as auditor by Ernst & Young, said: ‘The firm will clearly be talking to the SFO as we are in a position to provide information.’ He added that the auditors had drawn matters to the attention of CSG’s non-executive directors at the time of the new FD’s appointment.
Following changes to the board, the group reported that certain accounting policies had been applied ‘aggressively’ and in some cases there had been material errors. A further review revealed irregularities. The SFO said it had been passed a report on the irregularities by the Department of Trade and Industry.
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