Revolut expects to enter its financial accounts next week after months of delays in finalizing its figures as auditors put pressure on the fintech group to improve internal controls.
The UK-based company’s audit committee will meet on Thursday to approve the 2021 financial accounts, which auditor BDO will sign off on Friday, a person familiar with the matter told the Financial Times.
The company, which is led by Nik Storonsky, has taken a lot of pain in the pursuit of traditional banks. Insiders have revealed a culture of hard-charging and the company, which was last valued at $33bn in July 2021, has been hit by senior compliance staff.
The regulator has scrutinized the culture and called for a separate review of measures to prevent and detect financial crimes in fintechs that have been seeking UK banking licenses since early 2021.
The filing of such an account may remove another obstacle to the company’s efforts to obtain the license. The UK regulators responsible for granting licenses – the Financial Conduct Authority and the Prudential Regulation Authority – declined to comment.
Accounts for the year ending December 2021 had to be submitted to Companies House in September 2022. The fintech was then given an extension until the end of December – a deadline it also failed to meet.
In a statement on January 6, Revolut said the account had been “terminated”.
On Friday, it reiterated that the account was “completed” and expected to confirm that the business was profitable. “We are very proud of this and intend to file the account as soon as possible,” he said. BDO declined to comment.
While the final sign-off could be delayed due to concerns over delays, people familiar with the matter said they do not expect any additional delays.
BDO has pushed Revolut to improve its internal controls after the UK accounting regulator, the Financial Reporting Council, found there was an “unacceptably high” risk of “material misstatement” in its 2020 accounts.
The FRC’s findings, revealed by the FT in September, included an audit of BDO having an “inadequate” approach to revenue recognition. The FRC’s criticism of BDO has prompted auditors to take a tougher approach to this year’s accounts, people familiar with the matter said.
One person close to Revolut said the regulator could give the fintech a “restricted authorization” – a precursor to receiving a full banking license – within months and after March of submitting its accounts.
Storonsky told the FT in November 2021 that he hoped to get a UK banking license in early 2022. Last November, he said “we are very close to the end of the process, or close to us”.
Revolut has evolved from a low-cost money transfer service to offering bank accounts across Europe through a Lithuanian banking license. The previous funding round made it the second most expensive private fintech in Europe and meant it did not have to return to the market as the value of the technology collapsed.
Analysts say the UK banking license will help boost profits especially as higher rates make deposits more expensive, and will also help regulators in other markets to grant such licences.
Revolut can be fined by Companies House for failing to file their accounts on time. The penalty for filing three months late is up to £375 per company. Company directors can also face prosecution if the registry chooses to pursue.
European banks were fined €70,000 in November for late filing of financial statements.
The spelling of Nik Storonsky’s name has been corrected.