CSG to look into 'irregular' figures_2
10 September 2012
Recruitment conglomerate Corporate Services Group (CSG) has called in forensic accountants to investigate possible irregularities in how its subsidiary Comensura accounted for nearly £1m of rebates.
Recruitment conglomerate Corporate Services Group (CSG) has called in forensic accountants to investigate possible irregularities in how its subsidiary Comensura accounted for nearly £1m of rebates.
A late August trading update statement from CSG said: "While investigations are not complete, the Board believes that approximately £950,000 of rebates or provisions, which were not accounted for, should have been charged in 2006 or in prior years. The group is investigating the circumstances surrounding the failure to account for rebates correctly."
The statement said the forensic accountants' findings will be ready in time for CSG's announcement of interim results next week.
Also included in the statement is an announcement that a new management team for Comensura has been appointed. It is understood that former managing director Julian Young and others on the managed service operation's management team left Comensura about two months ago.
CSG had planned to float off a minority stake in Comensura in the second half of this year. CSG said the flotation was now "unlikely in the short term", given recent developments.
A CSG spokeswoman said it would be "premature" to comment pending the investigation's completion.
Young could not be reached for comment.
CSG's share price tumbled by 25% when the statement was released. But analysts said they did not expect this event to create more than "a blip" in the firm's financial fortunes.
"CSG has raised two separate, worrying issues at Comensura: accounting irregularities and poorer trading. While the accounting matter sounds more serious, the disappointing trading will have a longer term effect," said Rodney Hobson, editor of Hemscott.com financial website.
Analysts further speculated that the possible irregularities could be a case of "accounting too aggressively". A company might apply all the rebates, or discounts due to major clients, later to its accounts than should have been done instead of spreading them out over the period of the contract. That practice would then have the effect of inflating the appearance of profitability. But, Hobscott said: "There is no suggestion that there is anything untoward in the rebates system as such."
A late August trading update statement from CSG said: "While investigations are not complete, the Board believes that approximately £950,000 of rebates or provisions, which were not accounted for, should have been charged in 2006 or in prior years. The group is investigating the circumstances surrounding the failure to account for rebates correctly."
The statement said the forensic accountants' findings will be ready in time for CSG's announcement of interim results next week.
Also included in the statement is an announcement that a new management team for Comensura has been appointed. It is understood that former managing director Julian Young and others on the managed service operation's management team left Comensura about two months ago.
CSG had planned to float off a minority stake in Comensura in the second half of this year. CSG said the flotation was now "unlikely in the short term", given recent developments.
A CSG spokeswoman said it would be "premature" to comment pending the investigation's completion.
Young could not be reached for comment.
CSG's share price tumbled by 25% when the statement was released. But analysts said they did not expect this event to create more than "a blip" in the firm's financial fortunes.
"CSG has raised two separate, worrying issues at Comensura: accounting irregularities and poorer trading. While the accounting matter sounds more serious, the disappointing trading will have a longer term effect," said Rodney Hobson, editor of Hemscott.com financial website.
Analysts further speculated that the possible irregularities could be a case of "accounting too aggressively". A company might apply all the rebates, or discounts due to major clients, later to its accounts than should have been done instead of spreading them out over the period of the contract. That practice would then have the effect of inflating the appearance of profitability. But, Hobscott said: "There is no suggestion that there is anything untoward in the rebates system as such."
