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Accounting Errors Contributed To £1.3m Losses At Fjord Before Sale To Accenture
Fjordnet, the UK based international digital design consultancy, had incurred losses totalling almost £1.3 million in the two years prior to sale to the management consultancy Accenture in May last year
The Fintellect report is published this morning in Marketing Services Financial Intelligence. According to its editor Bob Willott, the accounting adjustments discovered by Accenture after the acquisition included:
· Unsupported debtors of £716,000,
· Calculation errors resulting in the understatement of deferred income and sales accruals of £138,000,
· Unrecognised balance sheet items resulting in a write-off of £6,000.
“Leaving aside the adjustments to prior years’ results, the group lost another £580,873 in 2012, despite increasing its turnover by 28% to £23 million after investing in a stream of international offices including those in Stockholm, San Francisco, Paris and Istanbul”, the report said.
During 2012 the group borrowed additional funds from shareholders totalling £550,000. By the end of 2012 the group had agreed to raise further working capital of £1.4 million from some of its investors – assumed to be the Proven Venture Capital Trusts managed by Beringea – at interest rates ranging between 6% and 20%.
According to the Fintellect report, Accenture has not disclosed how much it paid for Fjord. Indeed it refers to its various acquisitions in that period as “immaterial”
Fjord’s previous auditors include RSM Tenon, the firm that went into administration in August 2013. By then Deloitte had been appointed auditors of Fjord and were in post when the accounting adjustments were addressed.
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