Deloitte fined £14m in MG Rover tangle

The Financial Reporting Council (FRC) has fined Deloitte a record £14m for failing to manage conflicts of interest in its advice to MG Rover Group.

An independent tribunal has also backed the council’s call for a severe reprimand of the Big Four firm. In July the tribunal found all 13 allegations the FRC had brought against the firm were proven.

Deloitte partner Maghsoud Einollahi was also fined of £250,000 and banned from the profession for three years. The fine will go to the UK Consultative Committee of Accounting Bodies, which pays the costs of FRC disciplinary cases.

Deloitte has repeated its previous statement that it “disagrees” with the tribunal's main conclusions.

“Over the coming weeks, we will...

Continued...

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Comments

Not nearly enough ....    3 thanks

JC | | Permalink

Multiply by 3.5 times and we have a starting point as the basic fine for Deloitte - then add extras such as interest etc.

As for the individuals involved

persistent and deliberate disregard of the fundamental principles and statements of the ICAEW’s code of ethics.

Maghsoud Einollahi was also fined of £250,000 and banned from the profession for three years - (approx 4 months gross salary) How about a fine of 3 years salary equivalent to his 'ban' period? Say £750k * 3 = £2.25m

carnmores's picture

will they just put their fees up

carnmores | | Permalink

i hope the ICAEW complete a like for like comparison for the next 3 years to check if not the customers will have to pay

fine is a joke - way too small

query | | Permalink

that's not going to teach them!

Cosy relationship between    3 thanks

adeelabdullah | | Permalink

Cosy relationship between management and auditors is hardly a secret so things like independence and professional integrity are good tools for exams, hardly ever seen being applied in true spirit in actual world. Recent efforts by SEC in america and some other countries in terms of audit rotation is lead to BIG4 partners and managers sitting down together, exchanging clients, some even taking up the "Joint Audit" assignments keeping the same audit manager.

I think there is a serious lack of intent in our own profession to clean up, we are just too afraid.

Worrying for Big 4 Corporate Finance Departments    1 thanks

djt | | Permalink

Whatever one's view is on the outcome, it seems extraordinarily unfair commercially that ICAEW member firms are being judged against a framework of self imposed rules, whereas competitors do not need to demonstrate the same standard of integrity.

 

There is clearly a major conflict within mixed discipline practices and ICAEW need to get their act together before there is a mass exodus of professionals prepared to sacrifice their professional qualifications in order to put the bread on the table for their dependants.

 

I hope ICAEW take a firm but fair position in showing public support for a member firm otherwise the organisation may well find itself paralysed by Lady Hodge, the media, parliament and FRC.

 

 

DMGbus's picture

Compensation claims to follow from victims?

DMGbus | | Permalink

If there were any victims as a result of this error of judgment / departure from ethics and professional guidance then I would hope that the regulatory bodies would support compensation claims from any victims who may have suffered losses as a result of the misconduct.

This necessary support to victims provided by the regulatory bodies would demonstrate "public interest" and high moral standards of the profession to those outside the regulated accountancy profession.

DMGbus's picture

"Relevant stakeholders"    1 thanks

DMGbus | | Permalink

I would hope that the "relevant stakeholders" to be consulted by the guilty party will include the victims of their misconduct.

The victims must be the prime consideration.

I would suggest that if an appropriate settlement were to be made with the victims then this could perhaps justify a reduced fine.

On the other hand where a perpetrator maintains a stance of ignorance to acknowledging their offence then the fine might in fact be too low and require enhancement to reflect contempt for professional rules, conduct and image of the profession.

Some of us might be concerned that the perpetrators concept of "relevant stakeholders" is others in the profession who might conduct themselves in a similar way as a matter of course (an ingrained culture thing - selling signatures to please management - auditors who are "pets")  - the arguably corrupt culture of auditors being too pally with management within audit client companies.

The FRC have once again this year shown strength, hopefully they will not be forced to back down by powerful forces (with vested interests) within the profession.

 

How embarrassing to be 'Chartered' now    3 thanks

oldshoremore | | Permalink

These money-grabbing shysters are nothing to do with the once proud Institute we had. They and their lawyer friends dripping in Ferraris and backhanders are gradually getting their come-uppance. Those that failed to find a nosespace in the trough went to fawn at the ICAEW and splattered the institute with cute little earners called 'faculties' or wrote unfathomable tomes on current cost accounting and created UITF'S. (Good grief - whatever was Urgent about accountancy?. Debit is still by the window as it was before the War)   However let us leave them to wallow in their own trough of despond..

Time we had a fresh institute which excludes anyone under 30 and who has never had to pay wages at the end of the month.

I used to be proud of the term Chartered Accountant. I barely whisper it now in public.

I think it's the slough of despond ...

vstrad | | Permalink

... comes from John Bunyan's The Pilgrim's Progress.

Slough

andrew.hyde | | Permalink

Vstrad is right I think.  It means a marsh or bog, and is said to account for the name of the town that Betjeman referred to with such malicious glee.  Some would have you believe that the name comes from the sloe bushes that once grew in the locality.

Hmmm.

when I say trough I mean it!

oldshoremore | | Permalink

bah to plagiarism!  Be your own author - we are free accountants not literary clones..... 

Possible remake of The Prisoner?

andrew.hyde | | Permalink

'I am not a number, I am a CHARTERED ACCOUNTANT!'

Perhaps not.