US - "Billing irregularities" have forced international consulting firm Watson Wyatt to postpone the reporting of its fourth quarter and 2003 financial year results.
The results are now pending the completion of the firm’s year-end audit and will coincide with the filing of its Form 10-K with the Securities and Exchange Commission, the US financial regulator, around September 29.
The news makes uneasy reading for investors in the US and abroad who have been stung by a whole host of scandals emanating from the US and involving several big name companies during the last two years.
However, Watson Wyatt in the UK confirmed that the events are unlikely to have a direct bearing on the company’s clients in Europe, including the UK, because Watson Wyatt & Company Holdings in the US is a separate legal entity from its European counterpart, Watson Wyatt LLP.
In a statement, Watson Wyatt said: “Prior to issuing its year-end financial statements, certain billing irregularities were discovered. Management has reported this issue to the Audit Committee of the Board of Directors and has enlisted the assistance of its legal counsel and independent accountants to conduct a review of this issue so that the company can take appropriate remedial action.”
Watson Wyatt believes that the irregularities do not exceed $2m and affect fewer than five clients. The company’s management expects to complete the review in order to file its Form 10-K on time.
John Haley, president and chief executive officer of Watson Wyatt, said: These billing irregularities, although immaterial to our financial statements, reflect unacceptable business practices which we will not tolerate in our company.
“We concluded that in the best interest of our shareholders and consistent with our practice of forthright communication, we should complete this investigation before reporting our fiscal 2003 earnings. As part of this process, we will strengthen our existing controls to prevent such incidents from recurring.”
Watson Wyatt reaffirmed its projections for 2003 which include a 1% drop in revenues on the $710.5m reported for 2002 and diluted earnings per share from continuing operations to be in the range of $1.48 to $1.50.
Washington-headquartered Watson Wyatt has over 6,200 associates in 88 offices in 30 countries, including in the UK and Europe.
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