Integrator Phoenix IT Group has revealed that the profits at its midmarket services business Servo were deliberately manipulated over a lengthy period going back to 31 March 2009.
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The fraud came to light in early September and resulted in management suspensions and a major internal investigation at Servo’s Leed’s site.
Having completed their review of the firm’s books, auditors PwC and commercial law specialists Nabarro said they found no evidence of cash theft, but found that the unit had indeed been overstating its profits.
During the course of the investigation it emerged that the figures involved substantially larger than the initial figure of £14m, rising to £17.3m after tax. This was down to the profit misstatement having been made over a much longer period of time than at first anticipated.
As a result of the fraud, Phoenix said it had thrown Servo’s financial controller and divisional finance director to the lions, and announced plans to relocate the unit’s financial and accounting activities to a new centralised office in Northampton.
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