Global metal recycler Sims Metal Management has said it has been forced to write-down its inventory by $78 million (£50 million) at two of its UK sites.
As revealed in January, the board of Sims had established a special committee to investigate potential fraud at its Newport and Long Marston facilities.
It is still continuing to investigate this potential fraud.
However, in a statement, the company said: “The committee’s investigations have revealed that the primary root cause for breakdowns in the company’s control environment can be attributed to the failure to adequately supervise operations (including inventories), responsibly safeguard assets, and failure to maintain adequate controls over financial reporting relating to inventory.
“The UK operations did not properly implement well established group internal controls for the rapidly expanding Sims Recycling Solutions business in the UK.
“Internal audit failed to perform end-to-end walk-throughs involving transactions associated with new plants and technologies in the UK.
“Additional control failures identified, include, failure to test inventory adjustments, failure to identify and halt accumulations of excessive levels of inventories, and failure to successfully integrate IT systems in the UK. The committee has also identified areas of potential fraud in the UK, which are being further investigated.”
The company has also announced that impairment charges of $354 million (£228 million) have been made due to results for the period up to 31 December 2012 being significantly less than budget following the timing and value of past acquisitions.
