Deloitte fined record £15m for Autonomy failures
DELOITTE has been fined a record £15m by the accounting regulator for “serious and serial failures” in its audit of former FTSE 100 software firm Autonomy.
The Big Four firm was also ordered to pay more than £5.6m to cover the costs of the investigation by the Financial Reporting Council.
Deloitte contested the allegations but a tribunal found that the firm failed to act with integrity and objectivity in its work between 2009 and 2011. The fine dwarfs the previous record sanction imposed on an auditor. PwC was ordered to pay £10m for its work as auditor of collapsed retailer BHS, discounted to £6.5m for early settlement.
Two of Deloitte’s former partners, Richard Knights and Nigel Mercer, were also sanctioned.
It is the latest blow to the reputation of audit firms, which have been criticised for failing to raise red flags at companies such as NMC Health and Patisserie Valerie, which have been engulfed in accounting scandals.
The Big Four firms have been asked by the FRC to produce plans by next month for how they will ringfence their audit operations from the rest of their businesses as part of a push to boost audit quality.
Autonomy, founded by Mike Lynch, was bought for $11bn (£8bn) by Hewlett Packard in 2011. HP wrote off almost its entire value a year later and fired Dr Lynch amid accusations of fraud against Autonomy.
Dr Lynch faces possible extradition to the US on criminal charges and is awaiting judgment from the High Court in London in a £3.8bn civil suit.