Financial watchdog investigates Wood Group's accounting failures
- Wood Group is facing an investigation by the Financial Conduct Authority due to cultural failings in its accounting practices.
- An independent review by Deloitte revealed material weaknesses and inappropriate pressures affecting the company's financial reporting.
- The probe will investigate practices between January 2023 and November 2024, potentially impacting the company's future operations.
In the United Kingdom, Wood Group is under investigation by the Financial Conduct Authority (FCA) following significant concerns raised during an independent review. This review, conducted by Deloitte, uncovered serious cultural failings within Wood Group’s accounting practices, particularly within its projects business unit and its interaction with the group finance team. The findings pointed to instances of inappropriate management pressure to uphold previously reported financial positions and indicated a possible lack of evidence regarding accounting judgments. As a result of these issues, the company faced the need to restate its financial accounts from previous years and postponed the announcement of its financial results for the fiscal year 2024, which were initially scheduled for release at the end of April 2024. Consequently, the company's shares have been suspended from trading on the London Stock Exchange since that time. The investigation covers a specific time frame from January 2023 to November 2024, during which the FCA aims to delve deeper into the accounting practices and the corporate culture of Wood Group. The review's results revealed that the problems stemmed from a corporate ethos that may have contributed to withholding critical information from auditors, leading to potentially unreliable financial reporting. Wood Group has claimed that significant changes have been made since the findings were published in order to rectify these issues and improve its financial culture moving forward. In addition to these internal issues, the company has attracted interest from external parties, with Sidara, a Dubai-based potential buyer, making a takeover approach. Sidara's latest offer, received in April 2024, was valued at approximately £242 million, a stark contrast to a previous bid of £1.56 billion the year before, which ultimately did not proceed. This drop in valuation reflects the deterioration in Wood Group's standing following the emergence of the financial irregularities. Overall, the company is facing a precarious situation where its financial viability and corporate governance are under scrutiny. The FCA’s investigation could have long-term implications for Wood Group, particularly if further substantial evidence of misconduct is found. Stakeholders will be closely monitoring the outcome of this investigation, as it may have significant impacts on the future of the company and the confidence of the markets in its operations.