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IT blamed for £3.9m loss at Manganese Bronze

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15th Aug 2012
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London Taxi manufacturer Manganese Bronze Holdings will restate its 2010 and 2011 financial results after IT and accounting errors came to light.

The company delayed its half year results this week after it emerged the errors had led to a £3.9m understatement of historical losses going back several years.

Shares in the company took a pounding yesterday, falling 34% which has valued the group’s equity at £5.02m, after it blamed errors in its IT system for the accounting black hole.

In August 2010 the group introduced a new IT system to help manage their global supply chain and uploaded the closing general ledger balances from the previous system.

According to an official statement: “Due to a combination of system and procedural errors, a number of transactions relating to 2010 and 2011 and some residual balances from the previous system were not properly processed through the new IT system.

"This problem led to the over-statement of stock and under-statement of liabilities in the financial statements of previous years.”

The Coventry-based company also warned that trading in the first seven months of the year had been tough with net losses for the first half expected to be substantially higher than last year.

“The group is expecting higher sales in the second half but does not know at this stage if results for the full year will be in accordance with market expectations,” the group said.

At the end of June it had £2.8m of headroom in its agreed banking facilities and has continued to maintain the support of Chinese company Geely Group (20% owner) and its bankers.

In accordance with the provisions of IAS 8, the balance sheet at 31 December 2011 and the financial results for 2011 and prior years will have to be restated. Grant Thornton is acting as the company’s nominated adviser.

The unaudited half-year results will be announced on or before 24 September.

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By asmith.firwood.co.uk
17th Aug 2012 10:59

Human Error not IT

IT was not to blame here - it was inadequate checking of the brought forward data.

If this had been checked thoroughly it would have been found and corrected.

Garbage in - Garbage out.

 

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By GregStoner
23rd Aug 2012 14:44

or something else ....

From the data here its impossible to tell if it was predominantly an IT or a Human error - but it was an Information Systems (IS) error! It was probably an error at the interface between human and IT elements of the system. Was  "caused" by the  IT or by humans, or by a lack of understanding of how they were interrelated? Almost certainly the latter.

It is the (too common) attempt to treat the IT elements of a system as a separate entity that leads to many IS errors and problems, and why (for example) it is important that staff in accounting roles actualy bother to understand the IT and  ISs and their role in accounting.

In the end almost all IT and IS errors are, of course, human errors - but that is another issue: one of philosophy.

 

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