Online bank Revolut is facing more questions over its internal controls after it was criticised by a UK regulator for the unacceptably high risk of "material misstatement" in its account auditing.
The Financial Reporting Council (FRC) issued its damning verdict as part of its most recent audit quality inspections. According to the Financial Times, the audit carried out by BDO had an "inadequate" approach to revenue recognition which created a risk of material misstatement.
The FRC also flagged deficiencies in Revolut's payment processing.
The challenger bank recently celebrated its seventh anniversary and the passing of 20 million customers.
However, alongside its rapid growth, the bank has seen a worrying turnover of risk and compliance staff. UK chief risk officer Victoria Stubbs, UK head of regulatory compliance Justine Wootton and UK money laundering reporting officer Mathew Seneviratne have all quit in recent months.
Not only is Revolut due to file its 2021 accouints by the end of September, it is also likely to face pressure to invest more in its back office functions.
According to an insider quoted by the Financial Times, Revolut must improve “unsexy things like its back office and controls” because it “needs to have a back office like a bank and it’s got the culture of a tech firm”.
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