iSoft launches formal accounts investigation
Beleaguered UK healthcare software company iSoft has announced yet more bad news this morning. An initial independent investigation into possible accounting irregularities, commissioned in July, has concluded there are grounds for a more formal investigation. In a statement, iSoft said the initial investigation found evidence of irregularities affecting FY 2004 and FY 2005. The principal effect appears to have been to recognise revenues earlier than should have been the case, and iSoft claims the cash position of the group is not affected.

OVUM. Tola Sargeant

The board has suspended Steve Graham, who was commercial director at the time, pending the outcome of the more formal investigation. Another employee has been put on special leave of absence. iSoft said the other employees that appear to be involved have since left the group.

Shares in iSoft were down slightly (4%) in early trading to just over 57p. They've been trading at around this level for the last month having plummeted from over 400p at the beginning of the year.

Comment:

Things just keep getting worse for iSoft which, in addition to ongoing questions about accounting irregularities, still has yet to announce its FY 2006 results, appoint a new CEO, come to an agreement with its bankers or clarify the position of its multi-million pound NHS contracts. Against this backdrop, a second investigation into iSoft's revenue recognition over the last two fiscal years seems like the least of its problems. But it is clearly a very serious issue, and one that could impact profitability in the years concerned.

We hope, for iSoft's sake, that its cash position is not affected and that there is no adverse effect on its figures for FY 2006. Unfortunately, of course, there is still no word on when we can expect iSoft to announce its FY 2006 results, which were originally due in June.