Deloitte fined record £15m for Au­ton­omy fail­ures

The Daily Telegraph - Business - - Business - By Si­mon Foy and Michael O’Dwyer

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.

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