The United Kingdom’s Financial Reporting Council has reportedly found flaws in the audit of cryptocurrency-friendly payments app Revolut that included an “unacceptably high” risk of “material misstatement.”
According to a Monday report from the Financial Times, the U.K. Financial Reporting Council criticized the results of a Revolut audit released in July by accountancy and business advisory firm BDO, claiming the company had an “inadequate” approach to revenue recognition and “the risk of an undetected material misstatement was unacceptably high.” The financial regulator reportedly said BDO had inadequately tested Revolut’s payment processes.
Revolut was valued as a $33-billion fintech firm in July 2021 following an $800-million investment round led by Japan-based financial company SoftBank and United States-based hedge fund Tiger Global. The Financial Times report suggested that the payments firm was under pressure from auditors to improve its internal controls in compliance with U.K. regulations.
“The auditors are being significantly more challenging now, because they’re getting beaten up by their regulators,” reportedly said an individual familiar with the situation.
At the time of publication, Revolut was the only firm operating in the United Kingdom under temporary registration status from the country’s Financial Conduct Authority, or FCA. U.K. regulators require firms “carry[ing] out crypto asset activities” to register with the FCA as part of their Anti-Money Laundering and Combatting 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.
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According to reports, five top executives at Revolut resigned in 2022, including the firm’s head of regulatory compliance and money laundering reporting officer. Revolut Group Holdings and its crypto arm, Revolut FIC, are reportedly required to file their 2021 accounts by the end of September.