iSoft faces another financial probe
Published: 25 Oct 2006 13:40 BST
The finances of medical software company iSoft came under renewed scrutiny on Wednesday as a new investigation into "recent events" was announced by a senior accountancy body.
The Accountancy Investigation and Discipline Board (AIDB) is to question several current and former iSoft directors — all chartered accountants and thus answerable to the AIDB — over the company's financial statements for the period between 2002 and 2005. It is thought that the list includes two current non-executive directors and several former executive directors, including former finance director John Whelan.
The conduct of iSoft's auditors for the period, RSM Robson Rhodes LLP, is also to be investigated. Anyone who is investigated and subsequently has a disciplinary complaint upheld against them by tribunal could face an "unlimited" fine or even be disqualified from their professional body.
iSoft — which only last week announced it was putting itself up for sale — is the vendor of Lorenzo, a clinical and administrative application that is a key plank of the NHS's supersized IT revamp, Connecting for Health (CfH). However, iSoft's share price collapsed this year after the software was repeatedly delayed and the company's accounts had to be restated, which effectively wiped out its stated profits.
Aside from the damage caused to the NHS project by those delays — Accenture, which subcontracted iSoft, has recently pulled out of CfH — the restatement in June led to the resignation of chief executive Tim Whiston, who is now on the list to be investigated by the AIDB.
The AIDB has decided not to specify the individuals involved, but they will certainly include Patrick Cryne, Whiston's predecessor, who sold 3.5 million of his iSoft shares last year at £4.25 each, almost ten times their current value.
The period in question covers the financial years ending 30 April 2003, 2004 and 2005. Another investigation into iSoft's dealings, by the Financial Services Authority, is also currently underway.
iSoft said in a statement that "all current executive directors of iSoft who are members of those accountancy bodies were appointed after the dates under investigation, as was the non-executive director who is currently chairman of the audit committee". The company added that its current auditors, Deloitte & Touche, have found no evidence to implicate any current non-executive directors.
Not included in the AIDB's investigations is Sir Digby Jones, former head of the CBI who headed iSoft's audit committee, as he is not a chartered accountant. He now works on the advisory team at Deloitte & Touche.
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