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July 29, 2013

FRC tribunal finds Deloitte UK in breach of standards

The UK Financial Reporting Council (FRC) tribunal found Deloitte UK and the firm’s former partner Maghsoud Einollahi in breach of the Institute of Chartered Accountants in England and Wales’s code of ethics.

The tribunal decision refers to the review of the advisory work by Deloitte UK and Einollahi to MG Rover.

"The conduct of Deloitte UK and Einollahi fell short of the standards reasonably to be expected of, respectively, a member firm and a member of the ICAEW," said the FRC.

The FRC is yet to make a decision on the level of sections and financial fine given to Deloitte.

In response to the tribunal decision a spokesperson for Deloitte said: "We are surprised and very disappointed with the outcome of the tribunal and disagree with its main conclusions. Deloitte’s advice, which itself was not criticised, helped to generate over £650m of value for the MG Rover Group, keeping the company alive for five years longer than might have been the case and securing 5,000 jobs in the West Midlands during this period."

"Given the time this review has already taken, we would like to move on. However, the potentially serious implications of the judgement mean that it may be in the interests of broader business for us to appeal certain aspects of these findings. We intend to discuss this with other interested parties such as the ICAEW and CBI over the next few days," the spokesperson added.

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