A Deloitte Netherlands audit partner has lost a disciplinary decision relating to the audits of a former subsidiary of Dutch supermarket company Ahold, which could have major implications for a civil case being faced by the firm.
The audit partner has received a formal reprimand from the Appeals Board for Trade and Industry (College van Beroep voor het Bedrijfsleven – CBB) following a case brought against him by Dutch financial reporting watchdog the Foundation for Investigation of Business Information (Stichting Onderzoek Bedrijfs Informatie – SOBI).
In February 2003, Ahold’s share price crashed after investigations revealed large-scale accounting fraud, concerning the overstatement of vendor allowances at its former subsidiary, US Foodservice.
Deloitte US audited the figures from US Foodservice, which were then consolidated into Ahold’s results. Deloitte Netherlands was Ahold’s auditor at the time and signed off on its consolidated annual report.
The CBB originally ruled against Deloitte in March 2007 but the decision was appealed by both Deloitte and SOBI. Earlier this year SOBI has filed a €30 million ($40.2 million) civil claim on behalf of a group of shareholders who suffered losses in Ahold’s 2003 fraud scandal.
The watchdog’s chairman Pieter Lakeman said the CBB decision was “very positive” for its civil case.
“The basis of our case is the wrong-doing of Deloitte and now the wrongdoing has been officially decided, it backs us strongly,” he said.
Deloitte said it was disappointed about the verdict of the Appeals Board for Trade and Industry and would study the decision in more detail.
“The final [CBB] verdict does not have any implication for the civil case,” a spokesperson added.