‘Big Four’ accountancy firm Deloitte has been fined £925,000 for its handling of electrical goods retailer Comet’s administration in 2012.
Deloitte and two of its partners, Neville Kahn and Christopher Farrington, have been sanctioned by the accountancy watchdog and have also agreed to pay the costs of the Institute of Chartered Accountants in England and Wales (ICAEW) of £825,000, in addition to the fine.
ICAEW concluded that Deloitte failed to take the “necessary steps” to ensure its previous work advising Comet’s owners did not conflict with its duties as administrators.
It published in its ruling: “Deloitte’s client take-on procedure (TOP) failed to bring to the attention of the
independent review partners all of the information relevant to their consideration of whether the acceptance of the Comet formal appointment would raise actual or potential threats to the compliance of the Administrators.”
In 2014, Deloitte said it disagreed with suggestions it had been guilty of a conflict of interest, however according to reports the firm now accepts the administration process could have been improved in a number of areas.
Despite the fine according to Sky News, the ICAEW is thought to have determined that the outcome of the insolvency would not have been different even if Deloitte’s action had been correct.
Deloitte charged at least £15m in fees or its roles as administrator and then liquidator to the electrical goods retailer.
A Deloitte spokesperson said: “We recognise and regret that our engagement take-on processes in relation to the appointment of our partners as administrators of Comet Group Limited in 2012 were below the professional standards expected of us, as were certain elements of our work during the administration.
The shortcomings in processes were addressed in 2016. We are committed to complying with the ICAEW’s Code of Ethics in order to maintain the highest standard of professional conduct.”