Wandisco hires accountants to investigate suspected fraud
TROUBLED tech company Wandisco has hired forensic accountants to investigate a suspected $15m (£12.6m) fraud at its business.
The Sheffield-based company has appointed FRP Advisory to lead an independent investigation into accounting issues uncovered this week.
Wandisco told investors on Thursday that it faces “significant going concern issues” after discovering irregularities in its accounts.
The company said it believed that a senior sales employee had generated suspicious “purchase orders” that vastly inflated its revenues last year.
The company’s shares were suspended from trading on London’s junior AIM market while it investigated the issue.
Plans to seek a dual UK-US stock market listing, announced just days earlier, have been thrown into doubt. FRP Advisory works with companies in “complex and difficult situations” and offers services including forensic accounting and restructuring advice.
Wandisco has asked two non-executive directors, Peter Lees and Karl Monaghan, to support FRP’S investigation. Mr Lees is a managing director of investment banking company Stifel who was appointed to Wandisco’s board last year. Mr Monaghan founded Ashling Capital and has served as a non-executive director since 2016.
Before uncovering the suspected fraud, Wandisco was a fast-growing software company worth almost £1bn.
Its business involves helping companies move very large quantities of business data into the cloud, a process that is normally fraught with risks.
In January, the company said that revenues had grown 230pc to $24m last year. However, on Thursday it warned that the true figure could be as low as $9m.
BDO, Wandisco’s auditors, declined to comment but said the company’s annual accounts have yet to be filed.
Edison Group, the investment analysis firm, yesterday withdrew its coverage of Wandisco, saying: “Due to the nature of the ongoing investigations, we have not been able to speak to the company since the announcement.”
Alex Degroote, research director at Arden Partners, said an elevenfold growth in Wandisco’s trade receivables within 12 months, which was disclosed in a September update, was a “possible red flag”.
He said that receivables were usually linked to revenue “since the relationship between the two should be easy to explain”, but that revenue had only doubled over the same period.