Deloitte awaits probe verdict over MG Rover

Accountancy watchdogs will wrap up a probe into Deloitte for its work as auditor of MG Rover after combing through the findings of BDO Stoy Hayward’s eagerly awaited report into the collapse of the car giant.

Deloitte has shot down suggestions it did not do enough to redflag the foundering company’s troubles while it raked in millions in fees for non-audit work.

Cameron Scott, lead counsel for the Accountancy and Actuarial Discipline Board, said the panel would pore over the contents of BDO’s 850-page dossier before bringing the

four-year investigation to a conclusion.

The panel has been investigating the firm and its staff for its audit of MG Rover’s 2003 accounts.

‘We need to consider the findings of the independent inspectors’ report, but it’s a case of months, rather than years [before the investigation ends],’Scott said.

Speculation has increased in recent weeks that Deloitte’s work will be addressed in the exhaustive dossier, and the Big Four firm has taken steps to defend itself.

Sources close to Deloitte said it flagged up uncertainty surrounding a proposed financing deal with the Chinese car group Shanghai Automotive Industry Corporation, but ‘there was still hope at the time’, so a full-blown going concern warning was not necessary.

Instead, the firm decided in MG Rover’s 2003 accounts to issue a heavily modified audit opinion, stopping short of a full audit qualification that would have warned the accounts did not give a true and fair view of the car-maker’s health.

Deloitte has faced criticism because the car-maker collapsed six months after the annual report was finalised in October 2004.

The AADB then decided to investigate the conduct of Deloitte & Touche as auditors and advisers to the MG Rover Group and its parent company, Phoenix Venture Holdings Limited.

The probe also covers ‘certain non-audit services provided by Deloitte & Touche to the group,’ the AADB said in 2005.

It was thought the investigation would be wrapped up before the end of 2007, but the AADB has had to work in concert with other investigators, slowing its work down, but the board is now close to issuing its judgement.

Deloitte said in a statement: ‘We have not yet seen [BDO’s] report and so cannot comment upon its contents. However, we would be disappointed if the inspectors criticize our work or our people.’