The Financial Conduct Authority (FCA) is to drop its probe into troubled insurance claims processor Quindell, in light of the Serious Fraud Office’s (SFO) decision to launch a criminal investigation into the business and accounting practices at the company, which was forced to delayed publication of its annual accounts last month and has announced significant restatements for past results
In June the FCA said it planned to investigate Quindell in relation to public statements made regarding its financial accounts during 2013 and 2014. At the time, the company released details of a review completed by PwC into some of its previous accounting policies which concluded these were ‘largely acceptable but were at the aggressive end of acceptable practice’.
Since then, both the Financial Reporting Council (FRC) and the SFO have announced investigations into Quindell, although neither has given details of the scope of their inquiries.
In 2014 the FRC’s conduct committee began a separate review of Quindell’s report and accounts for 2011 and 2012. Last month the regulator said it had closed this inquiry ‘in light of the positive actions taken by the directors in correcting the identified errors, amending accounting policies and providing their undertakings.’
Quindell’s annual report and accounts for the year ended 31 December 2014 should have been published on 30 June 2015 but were delayed ‘due to the complexity of the process’.
These accounts have now been released with substantial restatements of prior year revenues, profits and net assets, which the FRC says include corrections and adjustments in response to the issues raised by its committee.
In particular, Quindell revised its accounting policy for claims management revenue recognition and certain related costs, reducing 2013 revenue by £109m and profit after tax by £130m.
In July, the FRC opened a separate investigation under its accountancy scheme into members and two member firms in relation to the preparation, approval and audit of Quindell’s financial statements for the period ended 31 December 2011 to the year ended 31 December 2013 and for the preparation and approval of the company’s interim results for the half year ended 30 June 2014.
KPMG took over as Quindell’s auditors from RSM Tenon, now part of Baker Tilly, in October 2013.
This week also saw Indro Mukerjee join Quindell as its new CEO, replacing Robert Fielding, who left in May. Mukerjee is the non-executive chairman of the tech group FlexEnable.
‘I’m of course aware of the challenges the company has been facing and respect the chairman, board and rest of the team for the way that they have been identifying the issues of the past, and dealing with them resolutely and rapidly,’ Mukerjee said.
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