Regulator, the Institute of Chartered Accountants in England and Wales (ICAEW) has issued a £925,000 fine to the administrators involved in the collapse of electrical goods retailer Comet.
ICAEW has fined Deloitte £925,000, plus costs, for failings in its procedures relating to the administration of the company in 2012. ICAEW found that Deloitte’s client take-on procedure and engagement acceptance policy did not comply with ICAEW’s Code of Ethics, along with the fine, issued a severe reprimand to the Big Four firm.
Two of Comet’s administrators were also fined by ICAEW. Neville Kahn was severely reprimanded and ordered to pay £50,000 and Christopher Farrington was reprimanded and fined £25,000.
Duncan Wiggetts, Executive Director, Professional Standards at ICAEW, said “The admissions within this settlement conclude our long-running investigation into the conduct of the insolvency practitioners who accepted appointments to act as the administrators of Comet in 2012.”
“Following the opening of this investigation, we conducted a thematic review of engagement acceptance procedures in the larger firms engaged in major insolvency appointments. This led, in 2016, to Deloitte making changes to improve its processes on insolvency appointments, which, if followed, should significantly reduce the likelihood of a similar issue happening again in the future.”
“This case should send a strong message to insolvency practitioners and their firms of the importance of demonstrating the highest standards and putting in place appropriate and robust processes to ensure compliance with Codes of Conduct. We will not hesitate to investigate and take robust action where we consider there is evidence of conduct falling short of that which is expected of our members and member firms.”
Insolvency regulation operates differently to audit regulation. Under the current framework it is individual practitioners who are regulated and not the firms they work for.
A Deloitte spokesperson said “We recognise and regret that our engagement take-on processes in relation to the appointment of our partners as administrators of Comet Group Limited in 2012 were below the professional standards expected of us, as were certain elements of our work during the administration.”
“The shortcomings in processes were addressed in 2016. We are committed to complying with the ICAEW’s Code of Ethics in order to maintain the highest standard of professional conduct.”