Head of Revolut resigns after auditing controversy

After weeks of criticism from the auditor, Revolut's finance head has resigned.

May 18, 2023
Head of Revolut resigns after auditing controversy
Matt Crabtree

Written By

Matt Crabtree

 
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Weeks after an independent auditor issued a scathing warning regarding Revolut‘s finances, the fintech giant's finance head resigned.

Two years after taking on the post, Mikko Salovaara is stepping down for “personal reasons” while the financial app continues to wait for a UK banking licence.

BDO, the company's auditors, had previously cautioned that the company's projected revenues for 2021 “may be materially misstated” due to issues with Revolut's internal systems.

Incomplete revenue warning

In three of Revolut's business segments, BDO was unable to verify the “completeness and occurrence” of revenue. Three-quarters of the group's annual revenue, or £477m, was included in the offering.

Mr. Salovaara attempted to minimise the warning as a “technical point” at the time of the company's March financial report release.

He admitted that their accounting-related IT systems had become inadequate. It's normal for a young firm to lack the necessary infrastructure at first, but given our rapid expansion and public profile, I can see why this has been pointed out.

By the end of the third quarter of 2021, we had fixed the particular problems that BDO had detected with our IT systems. He feels we're at the point where an audit won't cause any more holdups.

Sentence postponed

During our current inflation period, challenger banks have boomed in popularity. This news comes after receiving BDO's unfavourable judgement on its 2021 financials, Revolut released a public statement and retained legal counsel to defend its position that everything was OK.

The Financial Times stated that several members of Revolut's board were unhappy with the company's response, seeing it as an “overreaction” and evidence of a failure to grasp the significance of BDO's judgement.

Nearly two and a half years after applying for a UK banking licence, Revolut is still waiting for a verdict from the Bank of England and the City watchdog. Mr. Salovaara predicted that the permit will arrive “any day now” on March 1.

According to a source close to the firm, Mr Salovaara's departure had nothing to do with the qualified opinion BDO issued on the company's long-delayed 2021 financial statements or its application for a banking licence.

Since last year, Revolut has lost many of its most senior employees in its UK banking division, and his resignation is the latest high-profile departure from the company. UK CEO James Radford has also departed in recent weeks from Revolut.

Takeaway

Mr Salovaara, a Yale graduate who previously worked in the investment business, expressed his appreciation for the chance to serve as Group CFO at Revolut and his continued faith in the company's future.

CEO Nikolay Storonsky expressed gratitude to Mikko for his participation and best wishes for his future endeavours. Mr. Storonsky blasted the United Kingdom's “extreme bureaucracy”, hefty taxes, and red tape last week.

He said that he would never chose the UK as a venue to list the firm and blamed authorities for the application's delay.

In a city experiencing a recession, the London-based company Revolut has 25 million subscribers worldwide for its prepaid card app and currency conversion services.

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