Finance

Deloitte under investigation for Essar Oil audit

Deloitte is reportedly being investigated in connection with its auditing of refinery company Essar Oil UK.

Deloitte resigned as the company’s auditor in October 2020, raising governance concerns around Essar Oil UK’s audit strategy. It did not raise such concerns when it signed off the company’s accounts for the 18 months to September 2019.

The Institute of Chartered Accountants in England and Wales has opened an investigation into whether the Big Four firm should have raised its concerns about Essar’s governance earlier than it did, the Financial Times reported, citing documents it had seen.

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An ICAEW case manager wrote in the documents cited by the FT that “given the contents and timing of the resignation statement [relative] to the audit report issued I do have some potential concerns regarding the audit report issued”.

Deloitte declined to comment.

An Essar Oil UK spokesperson said in a statement: “Deloitte gave EOUK a clean audit opinion in July 2020, as did a separate independent auditor in 2021. EOUK has taken extensive action to address the governance concerns raised by Deloitte more than a year earlier, including the appointment of an additional independent director and a commitment to the Wates Corporate Governance Principles.”

An ICAEW spokesperson said: “Our disciplinary byelaws preclude us from commenting on whether any matter may or may not be the subject of consideration by our professional conduct department. Where such consideration results in disciplinary action being taken then a public announcement will be made.”

The ICAEW is also examining whether Deloitte missed a deadline for filing the reasons for its resignation at Companies House, the report said. It is also reportedly examining how Deloitte dated documents when it did file them almost six months after its resignation.

Auditors that resign over governance concerns are required to file a statement of reasons at Companies House within 28 days. Deloitte filed a statement in November 2020, but it was deemed unacceptable and returned, according to a Companies House response to a freedom of information request, seen by the FT.

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The second statement was not sent to Companies House until April 2021, almost six months on from Deloitte’s resignation.

Deloitte was fined £15m last year plus more than £5m in costs for its conduct during its audit of software company Autonomy.

Last month the Big Four firm revealed that its partners would receive more than £1m in average partner pay for the year to 31 May.

Deloitte’s revenue grew 4% to £4.5bn in the period, while operating profit jumped 23% to £756m from £611m the previous year.

To contact the author of this story with feedback or news, email James Booth

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