CSC admits to intentionally exaggerating NHS income by £15.5m

CSC has revealed that it intentionally exaggerated its income from the National Programme for IT (NPfIT) contract with the NHS by £15.5 million, adding to a long list woes for the troubled outsourcer.

The company, which has hundreds of millions of pounds locked up in public sector contracts, also revealed that it is currently under investigation by Her Majesty’s Revenue and Customs (HMRC), according to a report in The Times.

Internal auditors found that the business accounts had exaggerated the company’s income from the NPfIT by millions of pounds over a four-year period, which has resulted in a number of staff members being suspended.

CSC is in talks with the UK government over the failed NHS National Programme for IT, which may lead to the company having to write off the entire £957 million investment it made in the programme.

A Memorandum of Understanding (MoU) was due to be reached in April, but this has now been extended to June after failed negotiations.

The company has commented on the latest news that the income exaggeration was “an internal CSC accounting error and has no impact on our charges made to the NHS. It is entirely a matter for CSC and does not impact the NHS.”

“Certain finance employees based in the UK were aware…of the aforementioned errors, but those employees failed to appropriately correct the errors. Therefore, the company has classified these errors as intentional.”

Anthony Miller, managing partner at analyst firm TechMarketView, said that this is unlikely to be received well by CSC’s new UK and Ireland president Liz Benson, who was officially given her title this week.

“Liz Benson…must wonder whether she has been handed a poisoned chalice,” said Miller.

“For CSC, the NHS deal must seem like death by a thousand cuts. It was yet again a major factor contributing to CSC’s recent poor full-year results and, with an HMRC investigation apparently underway, it seems that the saga will continue to run and run.”

CSC has made some 1,140 job cuts in the UK since February, 500 of which were directly a result of the failed, £12.7 billion NPfIT.

It also received a negative reaction from the analyst community when it was revealed that the Ministry of Defence (MoD) had made a shock decision in awarding CSC a contract to deliver payroll and personnel services to serving and veteran communities to CSC. The contract was previously held by HP and was estimated to be worth approximately £100 million a year.

Copyright © 2012 IDG Communications, Inc.

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