Deloitte looks certain to reduce a record £14m fine after succeeding in its appeal to overturn several findings of a tribunal by the accounting watchdog over its role in the collapse of MG Rover.
An independent tribunal for the Financial Reporting Council (FRC) today overturned eight of the 13 findings from the original tribunal which took place in 2013. It had found misconduct and a failure to act in the public interest in the accountancy giant and former partner Maghsoud Einollahi’s roles in the run-up to the car group’s collapse in 2005.
Eight of the original findings have been overturned and a hearing is due to take place to determine the impact of this on the £14m fine originally imposed on the firm.
The independent appeals tribunal, chaired by Sir Stanley Burnton, upheld several findings of misconduct in relation to Deloitte’s work on the disposal of MG Rover’s loan book, known as Project Platinum.
Other findings in relation to Project Aircraft, the project to realise the value of tax losses within MG Rover, were overturned.
“We are pleased that the findings of failing adequately to consider the public interest and deliberate serious misconduct have been overturned. We take such responsibilities extremely seriously and these findings were entirely unreflective of the integrity and values of our firm,” said a spokesperson for Deloitte.
“However, we accept the Tribunal’s findings that aspects of our client engagement processes could have been better. As part of the continuous review of our internal guidelines, which have been strengthened regularly in the 14 years since this project, we will consider whether any further action is required,” added the spokesperson.
The appeals tribunal criticised the institute of chartered accountants’ lack of guidance on the need for accountants to act in the public interest.
“The FRC welcomes the Appeal Tribunal’s decision that there were some significant issues of misconduct in this case concerning the need for accountants to act with objectivity,” said FRC director Paul George.
“Firms should identify who the client is at as early a stage as possible so that any conflicts of interests can be addressed. In the event of a change in clients it is also essential to inform a previous client of the change and of the need to obtain independent advice. Threats of self-interest in relation to fees must also be safeguarded. These are important measures in safeguarding and maintaining confidence in the accountancy profession and in upholding the standards expected of members,” he added.