Energy regulator Ofgem has brought in a team of forensic accountants to see whether energy companies have understated their retail profits in a bid to justify higher prices.
The move was made to gain an independent accountant’s view to improve transparency over pricing decisions made by the power companies and give consumers more clarity over how retail prices relate to wholesale energy costs.
Ofgem also wants recommendations from the accountants on how best to improve accounting disclosures by energy suppliers. The report on the investigation, including recommendations, is due to last for around four months, after which, Ofgem will publish its own findings.
And the energy Big Six are not the only companies to come under the scrutiny of the forensic accountant’s eye this month. A few weeks ago forensic accountants were appointed by the Post Office to explore accusations of serious flaws in the computer system used in its outlets.
This followed in the wake of several sub-postmasters claiming that they were wrongly accused of theft and fraud. Their campaign, which has received the backing of MPs, has forced the Post Office to conduct a review of their cases.
The postal service accused the 10 sub-postmasters of false accounting after money went missing. Their contracts were terminated and some even went to prison, in cases dating back to five years ago. But the employees have always stated that there were major flaws in the computer system used in Post Office branches and it was this that led to the money disappearing.
The ex-Post Office staff are just a small sub-section of a much bigger group of some 100 sub-postmasters, who are all said to be considering suing Post Office Ltd over the alleged Horizon computer system problems.
MPs and Post Office managers met to discuss the matter, leading to the Post Office appointing a firm of forensic accountants to examine the allegations of deficiencies in Horizon raised by the 10 employees.
Roger Isaacs, who heads Milsted Langdon’s forensic accountancy team and has given expert accountancy evidence in a number of cases involving the Post Office and its Horizon system commented “I have testified in relation to the alleged weaknesses of the Horizon system and the weaknesses of the associated financial controls so news of the current inquiry comes as no surprise. I have acted exclusively for defendants, none of whom were convicted but, if it transpires that others have been found guilty of fraudulent acts of which they were innocent, simply by virtue of an inadequate accounting system, then one might expect to see very substantial claims for compensation”
As an accountant; Roger Isaacs specialises within business turnaround and business valuation.