iSoft NHS turmoil continues

The provider of NHS software is in a critical condition following an investigation into possible accounting irregularities
Written by David Meyer, Contributor

A senior manager at ailing health software company iSoft has been suspended, following the initial stages of an investigation into potential accounting irregularities.

Steve Graham, a founding member of iSoft's management team, has been commercial director at iSoft since its 2003 merger with Torex, another healthcare software provider.

The independent investigation, commissioned in July when an audit found "possible irregularities" in iSoft's past accounting practices, concluded that there were "grounds for a more formal investigation".

iSoft said in a statement that its accounts for the financial years 2004 and 2005 may be affected, and that "the principal effects of this would appear to have been to recognise revenues earlier than they should have been".

"They do not have any effect on the cash position of the Group," the statement continued.

In addition to Graham's suspension, another unnamed employee has been put on a "special leave of absence", while some employees who appear to have been involved have since left the company, according to iSoft.

Individuals who were senior board members during the period being investigated, but who have since left the organisation, include the now-ousted chief executive Tim Whiston, his predecessor Patrick Cryne and Sir Digby Jones, who sat on iSoft's audit committee before resigning last year to join Deloitte, the firm now auditing iSoft.

iSoft, which saw its share price almost decimated under the leadership of Whiston, is a major player in the massive NHS information revamp, Connecting For Health, being subcontracted through Accenture and CSC.

Its role in the scheme has been in question following Whiston's resignation and the accounting investigation. The company has also suffered severe delays in delivering on its NHS commitments.

"Things just keep getting worse for iSoft which, in addition to ongoing questions about accounting irregularities, still has yet to announce its FY 2006 results, appoint a new CEO, come to an agreement with its bankers or clarify the position of its multi-million pound NHS contracts," said Ovum analyst Tola Sargeant on Tuesday.

"Against this backdrop, a second investigation into iSoft's revenue recognition over the last two fiscal years seems like the least of its problems," she added.

A spokesperson for iSoft told ZDNet UK on Tuesday that it would be "inappropriate to comment further [on the investigation] at this point".

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