THE accounting practices at Quindell, the scandal-hit insurance outsourcer, have been dubbed as at the “agreesive end of acceptable practice” by PwC as part of an unfinished review by the Big Four firm.
Quindell, which has faced questions over its presentation of performance and governance, has sold the bulk of its business to law firm Slater and Gordon for £637m, with £500m being passed onto Quindell shareholders later in the year.
In the sale announcement, Quindell stated that PwC – appointed on 8 December to review the business – had identified accounting policies around revenue recognition and deferring case acquisition costs that were “largely acceptable but are at the aggressive end of acceptable practice”.
The accountants also identified some policies that “are not appropriate” around revenue and related balances associated with Quindell’s noise induced hearing loss cases, where the group lacked historical internal data relating to claims settlements needed to support revenue recognition and cost deferral.
The group will take a “more conservative” approach to accounting for revenue and profit in its professional services division, which is being sold off. While the financial impact is still to be calculated, it is likely that the changes will result in a reduction of revenue and profit on historical results.