After a four year investigation, the Accountancy and Actuarial Discipline Board has filed a complaint against RSM Robson Rhodes and Glyn Williams, the former auditors to software supplier iSoft.
Following the completion of the investigation, the regulatory body has filed a complaint against the pair based on allegations relating to financial statements made in 2003, 2004 and 2005.
A notice put out by the AADB yesterday states that the complaint alleges “acts of misconduct in relation to inappropriate recognition of revenue on long term contracts, iSoft’s failure to recognise on its balance sheet receivable balanced and associated liabilities in relation to income streams from contracts which have been ‘sold’ to a third part funding provider’ and ‘the audit of goodwill balances’.”
If found guilty, the independent tribunal can fine or ban auditors from practicing.
The AADB allegations come just a few months after iSoft’s former financial controller, Ian Storey, was banned from acting as a chartered accountant for eight years and fined £20,000 after admitting he gave false and misleading information to auditors.
Meanwhile, an AADB investigation into iSoft’s past executive and non executives Patrick Cryne, Stephen Graham, Timothy Whiston and John Whelan has been suspended as they face criminal trial over conspiring to make misleading statements to the market over the software groups’ financial performance.
The four will face court next September and the tribunal of RSM Robson and Glyn Williams may be postponed until afterwards so as not to prejudice proceedings.
Patrick Cryne stepped down when the firm was valued at over £1 billion while Tim Whiston resigned as chief executive in June 2006 after iSoft changed its accounting policy, in a move that wiped out £165m of historic revenues.
The changes in revenue recognition policy and a series of profit warnings, combined with failure to achieve promised delivery targets, saw iSoft’s share price plunge by 90% in 2005-06. The collapse raised questions about lucrative disposals of shares by the company directors in 2004.
The ensuing financial crisis and collapse in investor confidence saw iSoft sold off to Australia’s IBA Healthcare for £166m in October 2007.
The AADB makes clear the complaint does not relate to iSoft Group Limited, a company registered in Australia, formerly known as IBA Health Limited. Instead the charges relate to the company called iSoft bought by IBA Health in 2006, which subsequently changed its name to iSoft Group Ltd