Listen to this article

00:00

00:00

The UK’s accounting watchdog has opened a fresh investigation into accounting practices at Mitie, following a string of profit warnings by the pest control-to-office cleaning company.

The Financial Reporting Council said on Monday that it was probing the “preparation and approval” of Mitie’s financial statements for the year to March 2016.

This was under its “accountancy scheme”, the FRC said, which it uses to investigate members of accounting professional bodies who it suspects of misconduct or causing losses to investors.

Mitie said it “understands that the investigation does not relate to any current directors of Mitie”, including Sandip Mahajan, who resigned as the company’s chief financial officer on November 13 after less than a year in the job.

In the year to March 2016, Mitie was run by life peer Baroness Ruby McGregor-Smith, who quit her post as chief executive in October last year. She was followed out by former finance director Suzanne Baxter, who had been with the support services company since 2006.

The investigation is the latest in a series of regulatory actions concerning Mitie, which admitted in May that it had been aggressive in its accounting practices.

The FRC is already investigating the auditing of Mitie’s accounts by its former auditor, Deloitte.

In August Mitie revealed that it was under investigation by the Financial Conduct Authority, the markets watchdog, over the timeliness of one of its profit warnings.

New chief executive Phil Bentley has overhauled the group’s management team in an attempt to steer the business away from its troubled past.

Mitie said in September that it may cut up to 480 jobs and warned that the cost of its turnround would be higher than expected.

On Monday it reported that its half-year revenues had risen 4 per cent to £960m, which was short of the £1.1bn turnover it had forecast in September. Pre-tax profit fell to £5.1m from £12.3m.

Its order book at end-September stood at £5.9bn, static on the same time last year.

This is not the first time the FRC has looked at Mitie. It opened a separate line of inquiry into the company’s impairment testing of goodwill in its healthcare unit earlier in the year. The watchdog said on Monday that it was no longer looking at this aspect of Mitie’s financial reporting because the issues had been “satisfactorily addressed” in the group’s 2017 annual report and “further explanations by the company.”

Leave a Reply

Time limit is exhausted. Please reload the CAPTCHA.