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Deloitte fined record £15m for failings in audits of its software company

By Caoimhe Toman

Date: Thursday 17 Sep 2020

Deloitte fined record £15m for failings in audits of its software company

(Sharecast News) - Deloitte was fined a record £15m fine over failings regarding audits of its software company Autonomy between 2009 and 2011.
Cambridge-based Autonomy was acquired by Hewlett-Packard for £8.4bn in 2011 but HP called out accounting irregularities.

Judgment is awaited in a £3.8bn civil fraud trial brought by HP against the founders of Autonomy, where HP's successor companies alleged that the value of the company was fraudulently inflated ahead of its acquisition.

The Financial Reporting Council, which issued the fine against the auditor, also fined and sanctioned two partners from Deloitte who were involved in the case, Richard Knights and Nigel Mercer.

The FRC said that Deloitte and Richard Knights failed to "act with integrity and objectivity".

Deloitte agreed to provide a full analysis of the misconduct in its audits of Autonomy.

In addition, Deloitte has been ordered to pay all costs claimed by the FRC for its investigation, which amount to £5.6m, along with the costs of the independent tribunal.

The sanctions imposed by the tribunal "reflect the gravity and extent of the failings by Deloitte and two of its former partners," said Elizabeth Barrett, executive counsel at the FRC.

"The decision serves as an important reminder of the need for auditors to ensure that they conduct audits in compliance with these key audit and ethical requirements and of the consequences when they fail to do so."

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