Shares in Phoenix IT crashed by a third this week as the managed hosting, cloud and disaster recovery company admitted that “certain central processes within the finance function” at its Leeds office “have been repeatedly and deliberately circumvented”.
The shares plunged 71p to 139.5p when news of the accounting black hole became public and even reached a low of 130p, although at the time of writing shares had gone up to 149.75.
In a statement, Phoenix said: “Information has very recently come to light indicating the mis-statement of a number of accounting balances within Servo Limited and its subsidiaries over a number of accounting periods.”
A finance manager had been suspended over the alleged irregularities and forensic accountants have been brought in.
This is a wise move on the part of the company and demonstrates the importance of bringing in independent experts to undertake a financial post-mortem and give confidence to investors about the fiscal probity of the business moving forward.
As an accountant; Roger Isaacs specialises within business turnaround and business valuation.