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Aero Inventory auditors face tribunal

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12th Jan 2015
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The Financial Reporting Council’s (FRC) executive counsel has delivered a disciplinary complaint in relation to the conduct of Deloitte and the former finance director of failed aircraft parts wholesaler Aero Inventory.

An independent disciplinary tribunal will now be appointed in the near future to hear the formal complaint.

The complaint concerns Deloitte and its audit engagement partner John Clennett in relation to the audits of the financial statements of Aero Inventory for the years ended 30 June 2006, 2007 and 2008, prior to its administration in 2009.

Hugh Bevan, the former FD of Aero Inventory, is also under the spotlight in relation to the preparation and approval of the financial statements of the company during the same period.

The complaint alleges that the conduct of Deloitte, Clennett and Bevan - all members of the ICAEW - fell significantly short of the standards reasonably to be expected of members in that they failed to act in accordance with the fundamental principles of the Institute’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.

Back in October 2009 Aero Inventory said it was unlikely to deliver to its bank lenders the 2009 audited accounts within the time permitted, resulting in a breach of a non-financial covenant in those agreements.

In November the company was placed into administration with KPMG appointed as administrator. The following year it applied to the courts for a two-year administration period extension.

In March 2011 the FRC’s Accountancy and Actuarial Discipline Board (AADB) said it would investigate Deloitte and others involved in the production of financial statements leading up to the company being placed into administration.

At the same time KPMG issued a statement on the forthcoming re-launch of Aero Inventory after signing a deal with global logistics business DHL.

The agreement saw the large majority of Aero Inventory’s US$400m stock rationalised to a new DHL distribution centre in Singapore.

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