UK Firm Admits to Withholding Information from Auditors
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UK-based listed oil services and engineering company, John Wood Group has announced it will restate its financial results for 2022, 2023, and 2024, after an independent review by Deloitte uncovered deep-rooted “cultural failings” within its finance and project divisions. Profits are now expected to be lower than previously reported, and Wood’s share price dropped by 31% following the announcement. Over the past five years, shares have fallen by a staggering 84%. The company employs 35,000 people worldwide and is currently in takeover talks with Dubai-based Sidara.
Management Override and Withholding Information
The independent review revealed that key financial information was withheld by management and that there was inappropriate pressure to maintain previously reported financial positions. There was also a lack of adequate supporting documents for judgments made, and some accounting standards were also misapplied—such as holding assets on the balance sheet that should have been written off.
In addition to the internal finance culture issues, Wood’s CFO, Arvind Balan, resigned abruptly last week after it was revealed that he had actually misstated his professional qualifications!
Why Does This Matter?
This scandal reminds accountants of the critical role that ethical leadership, robust internal controls, and proper governance play in financial reporting. In this case once again - the role of accountants have not been properly fulfilled and the financial statements were not a fair reflection of the company’s affairs.
It also demonstrates that withholding information from auditors or allowing undue pressure to influence accounting decisions can lead to significant reputational, financial, and legal consequences.
Accountants are encouraged to review the strength of their own financial reporting cultures and ensure that their teams are trained, supported, and held accountable to uphold the highest professional standards.
Source: The Guardian
