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Revolut CFO quits after auditor BDO warning
- joering2 3y agoPunchline: “IT systems weren’t designed in such a way that would allow for IT or business process controls to be effectively tested throughout the year.”
- deleted 3y ago[deleted]
- rchaud 3y agoPssh, these are precisely the kind of burdensome regulations that are leading fast moving, thing-breaking companies like Revolut to leapfrog traditional finance /s
- wslh 3y agoThat is pretty bad, it sounds like a criminal investigation should start immediately.
- zx8080 3y agoProbably not a crimimal one. But imagine if a person cannot explain to tax agency some large sums of money flows.
- petesergeant 3y agoFor what crime?
- ceejayoz 3y agoIsn't figuring that out the point of investigating?
- bhouston 3y agoI am not sure you can start a crime investigation until there is an accusation of a crime. A failing audit isn’t enough. Financial oversight groups should start an investigation but it probably shouldn’t be called criminal at this point. Just an oversight issue where they demand more info.
- ceejayoz 3y agoYou can absolutely start a criminal investigation without accusing someone of a crime.
- manquer 3y agoAccusation by whom ? Who would have standing to accuse before investigating? Enforcement bodies start investigation for any reason and none, (see all the stuff FBI did during civil rights movement for example ) at best legal framework used is probable cause
- bhouston 3y agoFailing an audit doesn’t mean there is crime. But it is like a smoke alarm going off. It doesn’t mean there is a fire but there could be. This company is so big that it should have a mature infrastructure for this type of thing. It is quite strange and thus suspicious that it is running its business is a haphazard way that it can not be effectively audited.
- wslh 3y agoNot clearly explaining the financials to an auditor by a big amount is an alarm and the CFO should clearly state why this is happening.
- amne 3y agoWhat does it mean to be "effectively audited"? Is my spreadsheet missing a pivot table? Let's just remember that most bureaucracy exists so that only those who persevere can make it to the other side. And even then if you bother the wrong people there's more bureaucracy to harass you with.
- balderdash 3y agoTypically it’s against the law to file/maintain false business records, and to the extent that they raised money based on inflated financials that would typically be some sort of fraud
- exizt88 3y agoThere’s nothing in the article that indicates that regulators are considering a criminal investigation.
- teddyh 3y agohttps://archive.is/QI8b0 https://archive.is/QI8b0
- kman82 3y agoOh boy
- sschueller 3y agoFrom what I have read in the last years of how the CEO and the company in general operate I would not be surprised if there will be a criminal investigation. This isn't the first time Revolut has had issues. [1] https://en.wikipedia.org/wiki/Revolut#Controversies https://en.wikipedia.org/wiki/Revolut#Controversies
- rchaud 3y agoCFO's comments to The Guardian in December 2022 (the article also mentions the auditor's concerns)[0]: > Mikko Salovaara, its chief financial officer, told the Guardian in an interview that the company was on the brink of getting a banking licence from City regulators: “I think we’re at the very last stages. Really at the finish line.” Salovaara said the UK licence was a step towards achieving Revolut’s aim of becoming a “truly global bank”. It would allow the company to offer “an increasing set of services to our customers, particularly credit.” Sounds like another Wirecard. There's even the cliched startup quote "we want to be the Amazon of banking". WC wanted to be the Paypal of Europe. Amazing how far you can get before you've earned a single cent of profit! [0] https://www.theguardian.com/business/2023/mar/01/uk-fintech-firm-revolut-much-delayed-accounts-reveal-first-annual-profit https://www.theguardian.com/business/2023/mar/01/uk-fintech-...
- exizt88 3y agoThere’s a huge leap between fucking up your accounting systems and doing outright fraud. This isn’t even close to what WC was doing, at least from the available information.
- rchaud 3y agoIf you're providing financial services in a heaivily regulated industry, it's not that big of a leap. The company has a pending application for a UK banking license for the past 28 months; the turnaround time for that in the UK is 12 months. Yet even now, they have filed their accounts several months late, and without a clean bill of health from the auditor. The CFO of all people should have advised withdrawal of their application until internal controls were sorted. That they're resigning instead doesn't bode well. From the FT, their UK operations chief departed as well: https://www.ft.com/content/f27f6b80-d32d-4913-991d-c512f6e909c7 https://www.ft.com/content/f27f6b80-d32d-4913-991d-c512f6e90...
- skippyboxedhero 3y agoIt is also worth pointing out the original article also accompanied an implicit threat to take their company to the US if they weren't given a banking licence immediately. The stuff with the accounts already existed, apparently the regulators found these issues when examining their suitability for the licence (I have read from sources online that there is a very significant issue with revenue recognition, as in a percentage of revenue significantly above 50% couldn't be matched in their systems), but the resignations came after they went to the media and tried to bounce the BoE into giving them a licence (spoiler: what the CFO is quoted as saying it is total bollocks, they aren't close to getting a licence). The media furore in the UK from execs about insufficient levels of executive pay unfortunately has created the space for opportunism like this.
- krona 3y agoThe Revolut UK banking chief executive also just quit 'for unrelated reasons' after texting a death threat to a customer: https://www.telegraph.co.uk/business/2023/05/13/revolut-executive-shotgun-customer-fintech/ https://www.telegraph.co.uk/business/2023/05/13/revolut-exec...
- silisili 3y agoThis is so hilariously bizarre. Why does a customer have a bank executive's personal number? Why was the account frozen? Who did the exec think he was texting? And who was he going to be waiting for armed? I feel invested at this point, like I've watched a movie that just cut off in the middle...
- heavenlyblue 3y agoWhy did the executive have customer's phone number?
- silisili 3y agoThe article seemed to imply the customer had been texting complaints directly to the executive, not that the executive just cold texted a customer a weird threat.
- sampa 3y agorate hike will wipe out many companies it will blow up like this in very different places, wiping those who lived by the grace of free money
- cm2187 3y agoFor all its sins, I don't think that's the case of Revolut.
- pavlov 3y agoSo did “fintech” just mean “shitty bank” all along, same way that crypto was just shitty penny stocks.
- riffraff 3y agoRevolut has had a fee questionable moments already, this does not seem to have been the case for other European fintech operations (wise, klarna, n26 etc). So yeah, I think a lot of fintech is not particularly good, but I don't think we can generalize to the level of the crypto boom.
- bboygravity 3y agoYou might want to try the search term "N26 locking customer accounts for no reason with no recourse".
- zx8080 3y agoWhy do they do it? Is it a reaction on regulator critique, or a plain "let's lock this account up to take some money" dumb (or smart?) profit-generation?
- rahimnathwani 3y agoThe article says: “There is not any doubt over the completeness of the balance sheet, which, in turn, logically means that total revenue is also correct,” he[0] said. By my reading, this directly contradicts the statement of the auditors, published on Revolut's web site[1]: As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the completeness and occurrence of certain revenues for the year ended 31 December 2021. We have concluded that where the other information refers to revenue or related balances these may be materially misstated for the same reason. By my reading, this says that it's not just revenue that may be materially misstated, but revenue or related balances. So the statement by the CFO directly contradicts what the auditors say about both the Income Statement and the Balance Sheet. [0] Salovaara, the CFO. [1] https://assets.revolut.com/pdf/Revolut_Ltd_YE_2021_Annual%20Report.pdf https://assets.revolut.com/pdf/Revolut_Ltd_YE_2021_Annual%20... which is linked on https://www.revolut.com/financial-statements/ https://www.revolut.com/financial-statements/
- balderdash 3y agoAnd the the thing that links those two financial statements is the statement of cash flows, which tells the real story…funny that wasn’t mentioned…
- jsmith99 3y agoWhen auditors talk about the Other Information they mean the front half of the annual report and accounts i.e. the annual report rather the actual financial statements.
- rahimnathwani 3y agoYes, but: 1. The part I quoted suggest that any statement by management about revenue-related balances may be unreliable. 2. The 'Basis for qualified opinion', which does refer to the financial statements is clear that they were unable to verify almost 500MM GBP of revenue. ... we were unable to satisfy ourselves by the execution of such procedures or by alternative means concerning the completeness and occurrence of revenue within these streams totalling £476,856k which is included in the Statement of Comprehensive Income and Note 6 of the financial statements for the year ended 31 December 2021. Consequently, we were unable to determine whether any adjustments to this amount or related amounts were necessary. Regarding #2, if these numbers turn out to be incorrect, then it's extremely unlikely that the income statement could be adjusted without the balance sheet also being adjusted. The income statement reflects changes in the balance sheet over time. If the changes turn out to be wrong, then there are three possibilities: A) The most recent balance sheet is wrong. B) The previous balance sheet was wrong. C) Both (A) and (B).
- computing 3y agoI would not be surprised if this is another Wirecard/FTX brewing, and I will also not be surprised if it's all 100% legit.
- SilverBirch 3y agoThis is really quite very very bad. I remember someone on twitter a while ago pointing out they keep missing the deadline for publishing their accounts. Like one of the things I would be quite keen to do if I were applying for a banking license would be to make sure I'm getting the paperwork right. Given that Revolut have raiesd enormous amounts of cash, I'd imagine they're pretty keen to IPO, and to do that they need a UK banking license - and there's just no way that's happening any time soon given what's going on. This could really cause them trouble and in the mean time the equity of any of the employees has probably already gone to zero because of the massive valuations they've raised at.
- ztrww 3y ago> and to do that they need a UK banking license Why does it specifically have to be an UK banking license?
- rchaud 3y agoThat's where they're headquartered. Also in 2008, the UK had an issue where 350k residents had deposits at Icesave, a savings account offered by Landsbanki in Iceland, that went bust. The bank wasn't registered in the UK, and the government of Iceland refused to provide compensation for those that lost their deposits. They probably want to avoid a repeat of that. https://en.m.wikipedia.org/wiki/Icesave_dispute https://en.m.wikipedia.org/wiki/Icesave_dispute
- SilverBirch 3y agoTwo things: first they’re a bank, in the Uk, it looks terrible to not have a banking license and that’d kill their IPO price. Second, there are limitations on customer deposits and the services they can provide because they aren’t a bank, for example they aren’t currently Uk equivalent of FDIC insured. There’s basically an assumption that their banking license will massively help both their growth and their value per customer.
- ztrww 3y agoBut they do have a license in Lithuania which means all the deposits are covered by their insurance. I agree about the IPO part but I really find it hard to imagine an IPO would make any sense for them at this point. I don’t think there is any chance they could reach their current private valuation…