SIG’s board called in auditors to re-evaluate its accounts after a whistle blower alleged malfeasance last year.
The investigation has established that SIG overstated its 2016 profit by up to £3.7m, with up to a further £400,000 overstatement of profit relating to earlier years.
The review by Deloitte and KPMG also identified an overstatement of balances at 30th June 2017 relating to recoverable balances brought forward from 2016 and some additional receivables accrued in the first half of 2017. This resulted in up to a further c.£2.5m overstatement of profit for the half year ended 30th June 2017.
SIG will now have to restate previous financial statements and is working with Deloitte to ensure the correct accounting treatment.
At least some of the ‘mistakes’ were clearly deliberate, the review established. SIG said it was “suspending from employment a number of individuals who are being placed under disciplinary investigation into the circumstances surrounding the accounting for these balances”. It is also looking at getting back the incentive payments it has previously made to certain of these individuals.
As the overstatements relate to 2016 and prior years, and to an overstatement in the first half of 2017 that has been reversed in the second half, expectations for underlying profitability for the year ended 31st December 2017 remain unchanged. SIG posts its full 2017 results in March.