Scangroup audit fails to shed light on foreign holdings

Scangroup audit fails to shed light on foreign holdings

Marketing services firm WPP Scangroup. [Courtesy] Audit firm Deloitte has questioned the existence of five foreign investments associated with marketing services firm WPP Scangroup, even as investigations cleared its former chief executive officer of gross misconduct.

Deloitte said Scangroup had failed to reveal all information related to the companies, and thus gave the listed firm’s financial statements a negative opinion.

It said Scangroup did not account for the investments using the acceptable accounting method, which required it to record profits or losses in proportion to the percentage of ownership.

“We were unable to obtain sufficient appropriate audit evidence to determine if the investments exist or not, nor the appropriateness of the carrying amounts of these investments,” said the audit firm. READ MORE

“Consequently, we were unable to satisfy ourselves that no adjustments to the carrying amount of these investments or to the relevant share of net income for the year were necessary.”

Scangroup, which delayed the release of its financial results pending the probe on some of its top management including the former CEO, said it considered the investments “immaterial” and that is why it never revealed the shareholdings.

The results of First Primus West Africa Ltd and Ogilvy and Mather Advertising Namibia (Pty) Ltd, said Scangroup in its annual report for 2020, have been accounted for using the equity method of accounting in the consolidated financial statements.

“The group does not consider Ogilvy Zimbabwe (Private) Ltd to be material. Accordingly, the results of this company have not been included in the consolidated profit or loss account,” Scangroup said.

This came as the company unveiled its delayed results for the financial year ending 2020, which showed its profits declined by 22 per cent to Sh382.8 million. Net profit in 2019 was Sh491.4 million.

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