Saipem auditors found internal control failures

Saipem audit: Investigators found failure in internal controls

The auditors of Italian oil services company Saipem found failings in the internal control system of the company, according to reports on findings of the company’s audit committee.

The eight-page letter by the audit committee was published in response to a request by Italian stock market regulator Consob to clarify the failings and what action the company had taken to address them, Reuters reported.

Europe's largest oil services group shocked markets at the end of January when it slashed its profit forecasts for 2013, blaming lower margins on new contracts.

The company, 42% owned by oil and gas major Eni , is also embroiled in judicial investigations in Italy and Algeria that claim it paid bribes to secure a series of contracts in the North African country.

Saipem and Eni, who both deny any wrongdoing, have launched internal audits.

According to the Saipem letter the failings were classified by external auditors in the "significant deficiency" category for internal control systems.

"In particular certain critical aspects were found in an internal procedure governing the selection and appointment process of subcontractors," the letter said.

It also said there were some contracts and orders that had been stipulated by employees who did not have the power to sign them.

Saipem's internal audit committee said that, in light of corrective action put in place by the company, the failings "do not have any effects on the adequacy of Saipem's internal control system".

A spokesman for the company was unable to provide further details.

Saipem, which has said it does not need to provision for any possible fine over the Algerian probe, has said it is taking a more conservative approach in forecasting profitability.

Saipem shareholders are scheduled to gather for the annual shareholder meeting on Tuesday.

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