The Financial Reporting Council (FRC) is to extend its investigation into the preparation and approval of the financial information at IT supplier Computer 2000 Distribution Ltd (C2000) to include the audits and the conduct of EY as the company’s auditors for the five years in question
The FRC originally launched an investigation into C2000 under the Accountancy Scheme in May this year. It is looking at financial details for the years ended 31 January 2009 to 31 January 2013
The regulator’s decision followed an initial investigation by C2000’s US parent company, Tech Data Corporation (Tech Data), which looked in into the company’s accounting practices in the UK and across Europe.
Following this, the company restated its consolidated financial statement and other financial information relating to the 31 January 2009 to 31 January 2013 period.
Tech Data reduced its previously reported net profits by $27m (£16m), saying the restatement reflected adjustments relating to ‘an inadequate control environment’ within its primary operating subsidiary in the UK and two other European subsidiaries.
These were said to relate mainly to errors arising from ‘improper vendor accounting, improper use of manual journal entries and improper recognition of foreign currency exchange transaction.’
In a statement made when the results of the internal investigation became known earlier this year, Tech Data said it no longer employed ‘certain personnel responsible for accounting improprieties’ and had made changes such as implementing tools to document and review manual journal entries and new internal review and audit programmes. It has also appointed a chief ethics and compliance officer.
