Phoenix IT Group uncovers accounting irregularities

Phoenix IT Group, a cloud computing and IT services company headquarted in Northampton, has uncovered "accounting irregularities" that suggest some of its financial figures were deliberately falsified.

The discovery concerns Servo, an SMB IT services provider which it acquired in 2006. Phoenix has uncovered information that "suggests that certain control processes within the finance function at Servo Limited’s Birstall site in Leeds have been repeatedly and deliberately circumvented".

This lead to the "mis-statement of a number of accounting balances within Servo Limited and its subsidiaries over a number of accounting periods," the company said in a statement today. Phoenix expects that correcting these mis-statements will reduce the value of its net assets by £14 million.

The company has suspended one manager at Servo’s finance department, and has appointed auditor PwC and law firm Nabarro to investigate the matter.

"Based on the information to date, the board believes that the group is and will remain in compliance with the covenants in its banking facilities and that its net debt and working capital requirements can continue to be provided by the current facilities," it said.

In July, Phoenix was awarded a place in the government’s Public Services Network procurement framework, signalling that it is an approved network services provider for all government departments.

The PSN tender document includes a number of financial stipulations for elligibility, which include the right to exclude any supplier who "has been convicted … of any offence concerning his professional conduct".

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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