The Financial Conduct Authority (FCA) has launched an investigation into public statements made by Quindell about its accounts during 2013 and 2014, it was announced this morning.
Separately Quindell has requested a temporary suspension of its shares, while also starting a review of “a number of the company’s historic transactions and acquisitions”.
Quindell said it would co-operate fully with the FCA’s investigation under the Financial Services and Markets Act 2000.
The FCA said it would “liaise with other agencies regarding these matters as appropriate” but added that it would not be commenting further at this stage.
The temporary share suspension is being sought “pending finalisation of the audit of the group’s 2014 financial statements and quantification of the adjustments to be made and the subsequent publication of the 2014 audited financial statements”.
Last month, with completion of the sale of its professional services division (PSD) to Slater & Gordon and PwC’s review of its controversial accounting policies, Quindell said it had identified that its former accounting policies in respect of recognising revenue and deferring case acquisition costs were “largely acceptable but were at the aggressive end of acceptable practice”.
PwC also identified that certain policies were not appropriate, principally those relating to the noise-induced hearing loss cases revenue and related balances “that became significant during 2014”.
As a result, the company will be adopting a “more conservative and appropriate approach to the recognition of revenues and profits in the PSD”, which will “materially impact” its previously reported results for 2013 and first six months of 2014.
Quindell also revealed that it has started a review of “historic” transactions and acquisitions. In a statement to the Stock Exchange, it said: “This work is on-going but the company expects that it will shortly be in a position to announce additional information in relation to these transactions and acquisitions with a view to ensuring that more complete information is available in respect of the historical position; to ensure that any related party transactions are fully disclosed; and make associated corrections.
“These matters are largely non-cash items and the board will make clear the outcome of this work and will provide further information in the company’s report and accounts for FY 2014.”
Quindell said it expects trading to resume “as soon as practicable and no later than publication of the group’s 2014 financial statements”.
Meanwhile, Slater & Gordon has issued a statement to the Australian Stock Exchange in response to media reports to clarify that neither it nor its auditors, Pitcher Partners, have “received from ASIC [the Australian Securities and Investment Commission] any targeted inquiries in relation to the accounting practices of Slater & Gordon.
“As reported, we are aware that ASIC has been in contact with Pitcher Partners regarding its audit of Slater and Gordon as part of a routine, periodic and rotational review of the processes of auditors of publicly listed companies. ASIC reviews audit work in respect of a number of companies each year.
“ASIC’s engagement with Pitcher Partners is preliminary and ongoing. We remain very confident in the robustness of our accounting practices.”