Deloitte awaits probe verdict over MG Rover
AADB’s four-year investigation into audit of failed car maker draws enters final phase
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.
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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.’