Creative agency M&C Saatchi is taking a one-off exceptional charge of £6.4m to its 2019 results following an internal accounting review of several of the company's UK subsidiaries. The charge equates to £4.9m of specific issues identified in the review.
The board is appointing independent advisors to undertake a review of all the Group's accounts and accounting systems, as well as setting aside an extra £1.5m as a conservative measure to provide for any potential further items arising.
The internal review followed on from the independent auditor's report by KPMG which raised concerns about the accounting controls across the group, reinforcing similar concerns raised by the Audit Committee. That was in late May 2019, and was published in M&C Saatchi’s annual report on 29 May. The internal review confirmed KPMG's concerns and found instances of misapplication of accounting policies, mostly relating to the timing of revenue recognition and incorrect accounting of some assets and liabilities.
The company added that recently appointed Group Finance Director, Mickey Kalifa, has also appointed a new Finance Director for the UK division, together with additional senior finance staff. He is about to appoint the company's first Group Treasurer.