WageWorks Inc. (NYSE: WAGE) shares fell more than 15% after the firm disclosed that it would reopen an investigation into whether it withheld information from its auditor.
In a regulatory filing on Wednesday, WageWorks said a special panel of its board would take another look at an earlier probe by its audit committee.
The Company, which handles employee benefit programs like health savings plans and commuter programs for other companies, had already been under scrutiny for financial irregularities. Its top management has been replaced this year after it discovered the issues and its preliminary review indicates it will have to adjust its financial results for 2016 and possibly 2017.
The filing also said the San Mateo, California firm is cooperating with an investigation by the Securities and Exchange Commission after WageWorks voluntarily notified the agency.
KPMG, its outside auditor, had raised the issues with John Larson, WageWork’s lead outside director, about information being withheld in 2016 and 2017, the filing said.
A special committee made up of directors Thomas Bevilacqua and Jerome Gramaglia and recently named Executive Chairman, Stuart Harvey, will “review the procedures scope and findings of the audit committee’s investigation,” the filing said.
The audit committee had previously looked into the Company’s accounting practices, financial control and financial statements for 2016 and 2017, including the review of the accounting for a government contract. This review looked at whether there was an open flow of information and “appropriate tone at the top,” the filing said. The investigation concluded in May with the finding that “no illegal acts occurred.”
However, KMPG raised issues about lack of communication relating to allegations made by “former management’s counsel” after the audit committee’s review concluded that information was withheld from auditors, the filing said.
WageWorks has seen a management overhaul in the last few months. Former Chief Executive Officer Joseph Jackson left that post in April and resigned as Executive Chairman last week. Harvey was named on Wednesday to succeed him as Executive Chairman.
Edgar Montes was named Chief Executive Officer in April to succeed Jackson. At the same time, Colm Callan resigned as Chief Financial Officer and Kimberly Wilford resigned as General Counsel.