iSoft investigates possible accounts irregularities

iSoft, the healthcare IT supplier whose financial woes have been hitting the headlines since January, has announced an investigation into possible accounting irregularities in financial years up to the year ending 30 April 2005.

A statement from the company said: “The board of iSoft has received information suggesting possible accounting irregularities affecting revenue recognition under its former accounting policy in the financial years prior to and including the year ended 30 April 2005. The board has therefore commissioned an investigation into these possible irregularities.”

iSoft said that it did not expect there would be any material impact on its statement of revenues for its financial year that ended on 30April 2006 which totalled £195-200m. The figure is subject to audit under iSoft’s new accounting policy announced on 8 June.

A spokesperson confirmed that the investigation would be carried out by iSoft’s new auditors, Deloitte. The company has not set a timeline for the investigators’ report but it is hoped that it will  be available in a few weeks’ time.

The group has issued two profit warnings in the past six months largely due to delays in delivering software to the NHS. iSoft is contracted to supply clinical information systems to three parts of the NHS – the North-east, Eastern and North-west and West Midlands regions.

In June iSoft changed its accounting policy, wiping out £165m of historic revenues – effectively meaning it has never made a profit. Shortly afterwards chief executive Tim Whiston resigned.

At the same time, the group announced it had again delayed publication of its full year results because it had been unable to conclude negotiations with its banks. Yesterday’s statement said that discussions with banks continue to be progressed.

The statement says discussions are continuing too with “key counterparties in the National Programme for IT."

iSoft shares fell sharply from 61.75p at yesterday’s close (20 July) to a low of 47p when the markets opened, but rallied to 55.75p as trading continued. 

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