Shares in blue-collar recruitment firm Staffline (STAF:AIM) remain suspended at 670p this morning at the company’s request after losing a third of their value yesterday.
Staffline shares fell 330p or 33%, wiping over £90m off its market value, after the company delayed the release of its full year results.
Following the suspension of the shares yesterday afternoon the company released a statement to say that ‘concerns were brought to the attention of the Board relating to invoicing and payroll practices within the Recruitment division’.
BLOW TO AIM AND ACCOUNTING STANDARDS
While Staffline is confident that its policies regarding invoicing and payrolls are ‘appropriate’, and its auditors have raised no concerns in the past, it is taking the allegations seriously and has delayed publication of its results.
It also admits that ‘if the allegations are substantiated this could have a material impact on the Group and its profitability’.
While this isn’t as dire as the Patisserie Valerie (CAKE:AIM) trading update which said there was ‘no scope for the business to continue’ without an immediate cash injection, it is clearly serious enough for Staffline to issue a ‘material impact’ warning.
AIM has seen a number of high-profile accounting scandals over the years.
In 2005 construction firm Langbar collapsed after it ‘could not establish the existence’ of £370m of cash that investors were told was held on account in Brazil.
That case forced AIM to tighten its rules yet more than a decade later accounting standards still seem to be wanting.