Yahoo Finance Wandisco hires forensic accountants to investigate potential fraud
Under-fire tech company Wandisco has hired forensic accounts to investigate a suspected $15m (£12.6m) fraud at its business.
The Sheffield-based company has appointed FRP Advisory to lead an independent investigation into accounting issues uncovered this week.
Wandisco told investors on Thursday morning that it faces “significant going concern issues” after discovering irregularities in its accounts.
The company said it believed that a senior sales employee had generated suspicious “purchase orders” that vastly inflated its revenues last year.
The tech company’s shares were suspended from trading on London’s junior AIM market while it investigated the issue. Plans to seek a dual UK-US stock market listing, which were announced just days earlier, have also been thrown into doubt.
FRP Advisory works with companies in “complex and difficult situations” and offers services including forensic accounting and restructuring advice.
Wandisco has tasked two non-executive directors to support FRP’s investigation, Peter Lees and Karl Monaghan.
Mr Lees is a managing director of investment banking company Stifel who was appointed to Wandisco’s board last year. Mr Monaghan founded Ashling Capital and has served as a non-exec since 2016.
Prior to uncovering the suspected fraud, Wandisco was a fast-growing software company worth almost £1bn.
Its business consists of helping companies move very large quantities of business data into the cloud, a process that is normally fraught with risks.
In January, the company said revenues had grown 230pc to $24m in 2022. On Thursday it warned that the true figure could be as low as $9m.
BDO, Wandisco’s auditors, declined to comment but said the company's annual accounts have yet to be filed.
Analyst firm Edison on Friday withdrew its coverage of Wandisco, saying: “Due to the nature of the ongoing investigations, we have not been able to speak to the company since the announcement.”
Alex DeGroote, Arden Partners research director, said an elevenfold growth in Wandisco’s trade receivables within 12 months, which was disclosed in a September update, was a “possible red flag”.
Mr DeGroote said receivables were usually linked to revenue “since the relationship between the two should be easy to explain,” but revenue had only doubled over the same period.
