Regulation

Deloitte faces ‘record’ £15m fine for Autonomy audit failures 

Deloitte is reportedly facing a £15m fine over “serious” failings in its audit of software company group, Autonomy. 

According to The Financial Times, the Financial Reporting Council are looking to impose the “record” fine following the discovery that the ‘Big Four’ firm “failed to meet their public interest duty” regarding the audit.

The FRC took the case to its disciplinary tribunal following allegations that Deloitte, alongside former partners Richard Knights and Nigel Mercer, advised Autonomy to “present its financial performance in a way that was allegedly misleading to investors”. 

In addition to the fine, the watchdog has called for Knights to be issued with a £500,000 fine, and to be excluded from the accountancy industry for seven years. Mercer also faces a £250,000 fine. 

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Deloitte audited Autonomy in the years prior to its acquisition by Hewlett-Packard for $11bn (£8.7bn) in 2011. The sale was followed by an $8.8bn (£6.9bn) writedown by HP of the value of Autonomy.

The tribunal found that Deloitte was guilty of “serious audit failings”, including a loss of objectivity, breaching its obligation of integrity, adding it was “reckless” in its work for Autonomy between 2009 and 2011. 

A Deloitte spokesperson told Accountancy Today:  “We acknowledge the seriousness of the findings of the FRC tribunal, although it is inappropriate to comment further on the hearing at this stage. 

“Deloitte is committed to the highest professional standards in everything it does and our audit practices and procedures have evolved significantly since this work was performed over a decade ago. We are continuing to transform our audit by investing in firm-wide controls, technology and processes and have been vocal in our support for comprehensive reform.”

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