The Accountancy and Actuarial Discipline Board
(AADB) will begin deliberations as to whether it should investigate
the former auditor of Royal Bank of Scotland (RBS), Deloitte.

The FSA passed on its own recently issued
report on the failed bank, which was saved thanks to the
intervention of the British government and a taxpayer bill of £45bn
($70BN), for the AADB to look more closely into why no adjustment
was made by the bank, the audit committee and Deloitte when
valuating RBS’s exposure to some assets, which lost value in 2007
following the financial crisis.

The FSA report said its Enforcement Division
did not investigate the auditors’ work which is why it has put in
the request to the AADB.

A spokesman from Deloitte labelled the FSA
decision to provide the AADB with background information as “normal
procedure” and “does not imply that an allegation or complaint has
been made, or that the AADB plans to conduct an investigation.”

“Neither the FSA nor PwC reviewed our audit
work and no complaints have been made against Deloitte,” the Big
Four firm said.  

The AADB will consider what, if any, action it
is appropriate to take in relation to the conduct of any
accountancy firm or individual accountant.

However, the FSA stressed in its report the
enforcement division’s view was that there had been “a bias to
optimism by RBS senior management” in its approach to asset
valuation issues and “an acceptance of that optimism by RBS’s

The report noted that though the auditors
identified that an adjustment of at least £200m was required to
valuations proposed by RBS senior staff the overall optimistic
approach is “difficult to justify”.

The AADB is part of the Financial Reporting