Buy-and-build reseller Accumuli has called in the police after discovering a £500,000 black hole in the balance sheet of recent acquisition Boxing Orange.
Accumuli bought security services outfit Boxing Orange for an initial consideration of £5.48m in March, the largest of three purchases it made within a six-month period.
Originally, Accumuli had agreed to stump up a further £2.1m subject to performance. This has now been slashed to £1.3m after a detailed review of Boxing Orange's balance sheet revealed "anomalies" relating to accruals and deferred income.
The revelation led to the dismissal of Boxing Orange's financial controller in June and the matter is now the subject of a police investigation, Accumuli revealed in a stock exchange announcement yesterday.
"The impact of these anomalies is that liabilities were understated in the acquisition balance sheet by £0.5m," the firm said.
How to properly recognise recurring revenue can be a minefield, but Jonathan Lassman, managing director of rival security reseller NTS, had little sympathy.
"You cannot mess around with accounts or the tax man. The numbers will always come out in the end," he said.
Accumuli, which brought together Boxing Orange, tuscany networks and Fujin Technology under its own brand in July, stressed the episode had not adversely affected its view of Boxing Orange's current or future operating performance.
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