M&C Saatchi told investors that following an internal review into several of its subsidiaries it had chosen to take a “one-off exceptional charge of £6.4m to the company’s 2019 results”.
Of this charge £4.5m related to issues identified as part of the company’s internal review, while £1.5m has been put aside “as a conservative measure to provide for any potential further items arising”.
M&C Saatchi began its internal review in May after Big Four firm KPMG raised concerns in its independent audit report for the company’s annual financial report for 2018.
The issues applied to accounting controls across the group. The internal review confirmed KPMG’s initial concerns that accounting policies had been misapplied.
According to the company’s statements, the misapplication was “mostly relating to the timing of revenue recognition and incorrect account of some assets and liabilities”.
The company also noted a £1.4m adjustment to its property-related assets as part of an ongoing asset assessment, “as it is in the middle of an office refurbishment”.
The company said it has appointed an independent advisor to conduct a review into the group’s accounts which it expects to be concluded by November, however it would not disclose who it appointed to conduct the review.
KPMG declined to comment.