A filing with the SEC states iHeart is not able to file its 2017 annual report on time due to a delay in the completion of the financial statements from Clear Media Limited, which is an indirect subsidiary of the company with shares on the Hong Kong Stock Exchange. The company says several employees of Clear Media are part of an ongoing investigation for misappropriation of funds.
The SEC filing says Clear Media Limited is conducting an investigation by forensic accountants and an external law firm appointed by Clear Media Limited’s board of directors, and approved by the Audit Committee of Clear Channel Outdoor Holdings, into the misappropriation of funds. During the course of the special investigation, it was discovered that three unauthorized bank accounts were opened in the name of Clear Media Limited entities, and certain transactions were made. The matter has been referred to the police for investigation.
iHeart also let the SEC know that it has been unable to complete its assessment of the effectiveness of its internal control over financial reporting as of December 31, 2017 — and that has to do with the March 14 bankruptcy filing. iHeart says the Chapter 11 filing came at the same time during which the company’s preparation of its financial statements was being conducted. “The company determined that it was necessary and prudent to delay the filing of the annual report to allow management to focus on providing the required information and making the necessary filings with the Bankruptcy Court.”
The filing goes on to say that due to the nature of the Chapter 11 case, and important competing demands on management, the delay in preparing the annual report could not be avoided. The company has filed a motion asking the Bankruptcy Court for approval of the company’s independent registered public accounting firm, so that firm can continue to work on the audit of the company’s 2017 financial statements. iHeart says the completion of the audit of the financial statements by the accounting firm has been delayed pending the approval of the Bankruptcy Court.
iHeart says it is working expeditiously to complete its financial statements and file its annual report as soon as possible, “but because the special investigation is still ongoing, and the results of the special investigation are unknown, and because of competing demands on the company’s management as a result of the filing of the Chapter 11 Cases, the company is currently unable to determine when it will be able to do so.”