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FRC imposes record fine on Deloitte LLP

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The British Financial Reporting Council (FRC) imposed a fine of £4 million on Deloitte LLP for misconduct after the accounting regulator said the audit and financial statements of Aero Inventory Plc fell short of acceptable standards. A partner at the firm was also fined £150 000.

The fine relates to the work on the aircraft parts supplier’s 2006, 2007 and 2008 fiscal year accounts, the regulator said. The fine is the highest imposed by the FRC for misconduct.

The allegations related to “the appropriateness of the accounting and disclosure in Aero’s 2006 financial statements” of an acquisition, the costs of sales and stock valuations in the 2006, 2007 and 2008 audits and stock existence in the 2007 and 2008 audits, the FRC said in the statement.

“We accept the findings of the tribunal and regret that in this instance our audit did not meet professional standards,” a Deloitte spokeswoman said.

“It is a clear indication of the importance of the highest standards being maintained in all audits and the seriousness of the failure to perform an adequate audit of these financial statements which led to misleading information about the profits and turnover of the company being made to the market,” said Gareth Rees, executive counsel to the FRC.

http://www.bloomberg.com/news/articles/2016-11-10/deloitte-partner-get-record-u-k-fine-for-accounting-misconduct