PwC called in for forensic review of Yü Group accounts
8 Nov 2018
Yü Group plc has called in PwC to conduct a forensic review following accounting irregularities at the AIM-listed supplier of gas and electricity to UK businesses
8 Nov 2018
This follows a £10m writedown in profitability announced on 24 October when the company first flagged a series of accounting problems over recognition of historic accrued income; impairment of trade debtors; and gross margins being achieved against prior expectations.
The board estimated the combined adjustments would lead to around a £10m reduction in profitability when compared with current market expectations, with the company reporting a loss for the current financial year. Aged accrued income totalled £4.3m in the interim results as at 30 June 2018.
Big Four accounting firm PwC has now been brought in to forensically examine the accounts and identify weaknesses in processes and accounting compliance which led to the accounting problems.
Yü Group said it would ‘continue to invest in processes and systems and will take on recommendations from the Review of any measures to improve internal controls’, and will provide a further update to the market in due course.
In the 2017 annual report, the principal risks were identified as rapid expansion of the company and revenue recognition treatment, although neither were deemed as an ‘increasing’ risks.
On impairment of financial assets, the company had conducted a review of the impact of IFRS 9 Financial Instruments and related impairment issues, stating that ‘the Group concluded that there is not a material difference in the value of the impairment provision required at 31 December 2017 under the existing and new standards’.
The company’s statutory auditor is KPMG, who signed off the 2017 year end accounts on 6 March 2018 and was reconfirmed as auditor at the last annual general meeting in May. The auditor was paid £45,000 for audit of the financial statements, up from £35,000 in 2016 when the company listed. In the previous year, the Big Four firm was also paid £280,000 for advisory work in respect of its AIM listing, bringing its total fees for 2016 to £317,000.
Report by Sara White