Renold, an international supplier of industrial products, has revealed an accounting error first discovered earlier this year now totals £2.5m, following additional findings from a PwC investigation.
On 9 July 2019, the group announced the postponement of its AGM to permit the preparation of revised audited financial statements for the year ended 31 March 2019, following the identification of “historical accounting issues” in the Gears business unit, which is part of its Torque Transmission division.
In order to prepare accurate revised financial statements it commissioned an independent internal audit investigation, supported by PwC, to assess the extent and impact of the historical “misstatement” of results totalling £1.8m.
However the investigation, which has now been completed, identified “further errors” which principally impacted profit in the year to 31 March 2017.
Renold revealed the cumulative effect of these misstatements resulted in net assets at 31 March 2019 being overstated by £2.5m in total, and adjusted operating profit in the year to 31 March 2019 being overstated by £1m.
Renold added the independent investigation concluded that the misstatement was a result of “intentional mis-reporting” of financial information at a local level.
The misstatement also comprised many adjustments across a number of balance sheet categories.
Robert Purcell, chief executive of Renold, said: “These events are frustrating and deeply disappointing but the board, in conjunction with the Audit Committee, have acted swiftly to fully investigate all matters.
“We are working closely with Deloitte, the Group’s Auditor, to ensure that recommended improvements to the internal control environment are quickly and effectively implemented. With the investigation and audit of the revised accounts completed, we can refocus our efforts on operational improvement and generating value for shareholders.”