The UK Financial Information Council has found flaws in the audit of cryptocurrency payments app Revolut that included an “unacceptably high” risk of “material errors.”
According to a Monday report from the Financial Times, the UK Financial Reporting Council criticized the results of an audit of Revolut published in July by accounting and business advisory firm BDO, saying the company had an “inappropriate” approach to revenue recognition and “the risk of an undetected material misstatement was unacceptably high.” The financial regulator reportedly said that BDO had inadequately tested Revolut’s payment processes.
Revolut was valued as a $33 billion fintech firm in July 2021 after an investment round of USD 800 million led by the Japanese financial company SoftBank and the US hedge fund TigerGlobal. The Financial Times report suggested that the payments firm was under pressure from auditors to improve its internal controls in compliance with UK regulations.
“Auditors are being significantly more challenging now, because they are getting hit by their regulators,” a person familiar with the situation reportedly said.
At the time of publication, Revolut was the only company operating in the UK under the temporary registration status of the country’s Financial Conduct Authority, or FCA. UK regulators require companies that “carry out cryptoactive activities” registering with the FCA as part of their anti-money laundering and countering the financing of terrorism compliance. However, 12 firms continued to operate under temporary status once the registration was due to expire in March, until only Revolut remained on June 30.
According to reports, 5 senior Revolut executives resigned in 2022, including the firm’s chief compliance officer and the money laundering intelligence officer. Revolut Group Holdings and its cryptocurrency arm Revolut FIC are reportedly due to file their 2021 accounts before the end of September.
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