• Register
Return to: Home > News > Investigation into Renold’s Gears business unit shows ‘intentional misreporting’

Investigation into Renold’s Gears business unit shows ‘intentional misreporting’

In a statement to the London Stock Exchange, Renold has detailed the findings of the investigation into the historical accounting issues at its Gears business unit, which is part of the Torque Transmission division.

On 9 July 2019, the Group announced the postponement of the Annual General Meeting (AGM) to permit the preparation of revised audited financial statements for the year ended 31 March 2019, following the identification of these issues.

An independent internal audit investigation, supported by PwC, was undertaken and revised financial statements have been prepared and audited.

A review of the Gears business unit was initially undertaken following comments made by the Auditor to the Audit Committee regarding application of accounting controls in the business unit. The initial management investigation identified intentional misstatement of results at a local level, and as a result the Board immediately initiated an independent internal audit investigation, supported by PwC, reporting directly to the Audit Committee.

In July the company said the initial investigation had identified a total overstatement of the balance sheet at 31 March 2019 of £1.8m. The more extensive independent investigation largely corroborated the initial findings, in addition to identifying further errors which principally impact profit in the year to 31 March 2017. The cumulative effect of these misstatements resulted in net assets at 31 March 2019 being overstated by £2.5m in total, and adjusted operating profit in the year to 31 March 2019 being overstated by £1.0m. 

The independent investigation concluded that the misstatement was a result of intentional mis-reporting of financial information at a local level. The misstatement comprised many adjustments across a number of balance sheet categories. The impact on cash and net debt of £0.3m is unchanged from the announcement on 9 July 2019.

 Robert Purcell, Chief Executive of Renold, said: "These events are frustrating and deeply disappointing but the Board, in conjunction with the Audit Committee, have acted swiftly to fully investigate all matters. We are working closely with Deloitte, the Group's Auditor, to ensure that recommended improvements to the internal control environment are quickly and effectively implemented.

"With the investigation and audit of the revised accounts completed, we can refocus our efforts on operational improvement and generating value for shareholders."

Top Content

    South Africa: sensing new opportunities

    It has been an interesting couple of years for the profession in South Africa. A number of high-profile scandals have brought the profession and the role of auditors into sharp public focus, brewing a distrust towards accountants and a large expectations gap. Joe Pickard reports.

    read more

    Ghana: a quest for consistency

    Ghana’s current economic profile would suggest a fertile landscape for purveyors of accounting services. But inconsistent approaches to compliance and application of standards – coupled with problems in the banking sector and consequent liquidity constraints – have created a challenging environment. Paul Golden writes.

    read more

    Drone technology: audit takes to the skies

    The movement towards a digitised era has already impacted the auditing profession in a number of ways, from blockchain to artificial intelligence. Now firms are taking to sky and using drone technology in their audits. Mishelle Thurai speaks to Big Four firms to find out more.

    read more

    SBC: a new alliance joins the market

    Jonathan Minter speaks to Paul Tutin, chair of founding firm Streets Chartered Accountants, about why the business and its European partners took the decision to launch their own association.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.