Deloitte has been fined in the UK by the FRC again. We know that the big 4 accounting firms have been frequent targets of the Financial Reporting Council in the UK. The firm was sanctioned and so were two of their partners.
They were fined 19.4 million dollars which is a record fine by the FRC. They also have to pay for the cost of the investigation which was around $7 million.
Richard Knights was fined $647,160 and excluded from membership in the Institute of Chartered Accountants for England and Wales for five years
Nigel Mercer was fined 323,580.
Deloitte will have to provide a root cause analysis for the reasons of misconduct.
Audits related to financial statements from January 2009 to June 2011
Hp acquired Autonomy in 2011 and found that executives were hiding losses. They categorized losses as expenses for marketing.
HP then took an 8.8 billion write down for the acquisition. They acquired autonomy for 10.3 billion.
Hp later sold the company to Micro Focus.
The FRC claims that Deloitte partners were too friendly with the CEO of Autonomy (Mike Lynch). The FRC stated that Deloitte and their partners were culpable of serious and serial failures in the discharge of their public duty. The partners did not act with integrity, objectivity, competence, due care and professional skepticism.
Deloitte said that they have improved their practices from a decade ago.
Other News For Deloitte
Deloitte is being challenged in Florida over their bid on a Medicaid contract. As you might remember Deloitte was awarded a $135 million contract by the Florida Agency for Health Care Administration. IBM and Accenture have both filed challenges to the decision.
IBM’s challenge focuses on the details of the contract while Accenture’s challenge focuses on Deloitte’s past failings with Florida’s unemployment systems. IBM says that Deloitte and Accenture have unfair advantages because they previously worked with Florida.