Deloitte set to face FRC disciplinary over Aero Inventory audit
FRC disciplinary tribunal against Deloitte and audit partner John Clennett over Aero Inventory audit will commence on 9 May
DELOITTE is set to face an FRC disciplinary tribunal over its conduct relating to its audit and the financial statements of collapsed AIM-listed aeroplane parts manufacturer Aero Inventory.
The case – which will examine the conduct of audit partner John Clennett – will be heard before an independent disciplinary tribunal after the profession’s watchdog made the formal complaint in connection with the conduct of Deloitte and Clennett.
The complaint relates to the audits of the financial statements of Aero Inventory and its subsidiary Aero Inventory (UK) for the years ended 30 June 2006, 2007 and 2008.
In July 2015, the FRC issued a formal complaint against ex-Aero Inventory FD Hugh Bevan, which led to him being banned from practicing for three years.
The complaint alleges that the conduct of Deloitte and Clennett “fell significantly short of the standards reasonably to be expected of members and member firms in that they failed to act in accordance with the fundamental principles of the ICAEW’s Guide to Professional Ethics and Code of Ethics requiring them to perform their professional work with due skill, care and diligence and to act with professional competence and due care”.
In March 2011, the FRC looked into the work conducted by Deloitte auditors and members of the ICAEW that were employed at Aero Inventory.
The listed company suspended shares on the main market in October 2009 due to problems with reported inventory levels in its accounts for both 2008 and 2009.
Deloitte had refused to sign off on the 2009 accounts.
KPMG partners Jim Tucker, Richard Heis and Allan Graham, were appointed joint administrators to Aero Inventory in November 2009.
In November 2010, the administrators applied to the courts to extend the administration period by two years.
A Deloitte spokesperson said: “We note yesterday’s announcement from the FRC. We take this matter very seriously and have co-operated fully throughout this process. We will not comment further before the outcome of the tribunal hearing.”