Atos Accounting Errors: Audit Triggers U.S. IT Services Revenue Concerns
Atos, based in Paris, France, is a global IT consulting firm that ranks among the world’s Top 250 Public Cloud MSPs and Top 250 MSSPs, according to annual ChannelE2E and MSSP Alert research, respectively. The IT services provider has 105,000 employees worldwide.
Atos U.S. Revenue Recognition: Auditor Concerns
Atos auditors say two businesses in the United States (known as Atos IT Solutions and Services Inc. and Atos IT Outsourcing Services LLC) will “require additional diligences.” Those two businesses represented 11 percent of the company’s 2020 revenues.
The statement noted:
“As part of our audit, we have identified in two US entities (Atos IT Solutions and Services Inc. and Atos IT Outsourcing Services LLC) several matters relating to internal control weaknesses over financial reporting process and revenue recognition in accordance with IFRS 15 leading to several accounting errors, as well as risk of override of controls in this respect.”
The turnover and the operating margin of those two entities represent about 11% of consolidated turnover and about 9% of consolidated operating margin.
As a result of the situation described above, the Group management hired external firms to perform additional works to obtain the necessary evidence that the financial reporting of these US entities is free of material misstatements and an independent forensic investigation.
Despite the additional audit procedures that we have carried out in those circumstances, we were not able to perform within the timeframe the necessary work to obtain sufficient appropriate audit evidence in respect of revenue recognition or other related account balances of these two US entities and on the absence of material misstatements for the consolidated financial statements.”
Amid the apparent accounting errors, Atos said it was “strongly enhancing its preventive controls and processes through a comprehensive action plan.”
Atos Accounting Errors?
What does all that mean? Reuters boils it down this way:
- As part of a regular audit of its accounts, Atos accountants identified problems with financial reporting “leading to several accounting errors.”
- Atos hired external firms to investigate whether those errors led to a material misstatement of financial performance, but said there was not enough time to complete this work before the regular audit was published.
The Atos accounting disclosure comes after the global IT services giant pursued but failed to acquire U.S. rival DXC Technology in February 2021.