In a recent report, Viceroy Research shed light on some concerning revelations regarding Hexagon, a prominent aggressive-acquirer in the industry.
While conducting a thorough investigation of Hexagon’s subsidiaries, Viceroy Research discovered “several ongoing tax audits” being conducted by “local taxing authorities,” which had been brought to attention by auditors EY back in 2019. Surprisingly, not a single analyst seemed to have acknowledged the significance of these audits or even questioned their implications.
Unveiling Hidden Risks
The information disclosed by Viceroy Research has significantly impacted the ongoing investigations and consumed a considerable portion of Viceroy’s capacity. It is evident that analysts were seemingly unaware of these crucial tax audits, highlighting a possible lack of vigilance on their part. Had they been more attentive, this risk would have likely been uncovered earlier. Interestingly, Hexagon’s conference calls have not addressed the topic of “tax audits” since the disclaimer appeared in 2019, making it even more suspicious.
Challenges Faced by EY
Viceroy Research further notes that EY, the auditors of Hexagon, might have faced substantial obstacles during their audit due to the implementation of IFRS 15 changes in 2018 and IFRS 3 changes in 2020. These changes could have complicated the financial reporting process for the aggressive-acquirer, which raises concerns about the accuracy and transparency of Hexagon’s financial statements.
Future Implications
Given the seriousness of the ongoing tax audits and the challenges faced by EY during their audits, it is reasonable to expect sweeping changes in Hexagon’s financial reporting in the future. Investors and stakeholders need to be cautious and closely monitor any updates or further developments regarding the audits, as they could significantly impact the company’s financial health and credibility.
Viceroy Research’s latest findings regarding Hexagon’s undisclosed tax audits have brought to light crucial risks that were previously ignored by analysts. This revelation highlights the importance of conducting comprehensive due diligence and not solely relying on surface-level financial reports. The ongoing investigations and potential implications of the tax audits should prompt investors and analysts to maintain a keen eye on Hexagon’s future financial disclosures to make informed decisions. As the situation unfolds, it will be crucial for the company to address these concerns transparently to regain investor confidence and trust in its financial reporting practices.
