Given the FRC report, BDO may have to take a more rigorous approach to audit Revolut.
UK-based neobank Revolut has come under increased pressure after the Financial Reporting Council (FRC) discovered flaws in its audit by BDO.
Earlier in July, the FRC published a report suggesting an improvement in the auditing sector but slammed BDO and Mazars. According to the report, the quality of work by BD and Mazars was unacceptable.
Out of eight audits by Mazars, only four proved satisfactory. Also, only seven out of twelve audits by BDO were considered acceptable. Out of the five unacceptable audits, there was an unnamed ‘financial services provider’ with a risk of an undetected material misstatement. New findings by FT reveal that the firm is Revolut.
Consequently, the UK firm is now under pressure to improve its internal control mechanisms so it may churn out reliable financial reports. According to an unnamed source, the firm needs to improve its inner workings, which are similar to that of a tech firm than a bank.
How Audit Flaws Will Delay Revolut Banking License
Given the FRC report, BDO may have to take a more rigorous approach to audit Revolut. However, a more rigorous approach may likely have the unintended effect of delaying the filing of Revolut’s account.
While the corporation may not be sanctioned for the delay, its founder and CEO, Nikolay Storonsky, may be prosecuted. Also, the company may attract civil penalties that will further delay its UK license.
Recall that the firm has been pursuing a banking license and a license to provide crypto services in the UK. The neobank submitted its license application in January 2021 but has yet to get approval. According to Storonsky, out of 48 license applications, it received 44 approvals, with all pending licenses linked to UK authorities.
Revolut has been very deliberate about the pursuit of the banking license that it said goodbye to top company executives in July. Meanwhile, the corporation is looking to offer its native token to customers as a reward for their loyalty.
Also, it recently obtained a license from the Cyprus Securities and Exchange Commission. With this license, Revolut can now offer cryptocurrency trading services in the region.
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