UK Regulators Find Flaws With Revolut Audit Records

British financial technology firm Revolut has been under pressure after the United Kingdom regulator, the Financial Reporting Council (FRC) discovered some flaws in its audit records. According to the Financial Reporting Council, the flaws include an unacceptably high risk of material misstatement.

Initially, when the investigation began on the rapidly growing payment group, the firm involved was not publicly disclosed. The only information available was that the firm had “suffered a string of high-profile defections in its risk and compliance teams in recent months.” 

BDO, an international network of public accounting, tax, consulting, and business advisory firms that provide professional services, was in charge of the unnamed firm’s account auditing.

BDO’s audit was later faulted by the Financial Reporting Council. Based on FRC observations, the audit executed by BDO suffered from an insufficient method of recognising revenue. On that premise, “the risk of an undetected material misstatement was unacceptably high.”

The previously unnamed “financial services provider” under audit was identified as Revolut by people familiar with the matter. These same people argued that if BDO’s approach was more rigorous than it was, it would have led to delays in filing key accounts for Revolut subsidiaries.  

Notably, a delay in the filing of accounts for subsidiaries is hardly punishable but it may cause the persecution of Revolut company’s directors. Additionally, the company itself may be susceptible to civil penalties under UK law. Once this happens, the co-founder and CEO of the fintech company, Nikolay Storonsky would be affected.

Hence, the filing of these accounts by Revolut Group Holdings Ltd, the group’s parent company, and Revolut Ltd is due by the end of September. Its other UK subsidiaries like Revolut FIC Ltd and Revolut Travel Ltd are also due in the same period.

Revolut Scaled Through Crypto Winter Before Audit Issues

Although faced with these audit issues, Revolut has defied the crypto winter in many ways and instead scaled up its operations. 

In August, the fintech firm recorded a series of milestones. It started with its expansion into Singapore with the launch of a trading platform which listed 80 tokens including bitcoin (BTC) and Ethereum (ETH).

At another time, the company received approval from the Cyprus Securities and Exchange Commission CySEC to offer its crypto services in that territory

Revolut became the first firm to be awarded the crypto asset authorization in Cyprus.