The body which regulates auditors and accountants in the UK has handed Deloitte a record £15 million fine after an investigation into its audit of the published financial reporting of the software company Autonomy between January 2009 and June 2011.

The Financial Reporting Council (FRC) announced the sanctions against Deloitte and former partners Richard Knights and Nigel Mercer.

Contested

An independent disciplinary tribunal made findings of misconduct following a seven-week hearing during October and November 2019 and the sanctions were determined following a hearing in July this year, the FRC said. Deloitte had challenged the FRC findings.

“After lengthy, fully contested proceedings, the tribunal concluded that the audit work fell significantly short of the standards expected of an audit firm and its partners,” said FRC executive counsel Elizabeth Barrett.

As well as the fine, Deloitte was “severely reprimanded”. It is also required to provide a report on why its processes and controls did not prevent the issues.

Autonomy sales

Mr Knights has been excluded from membership of the Institute of Chartered Accountants for England and Wales for five years and has been fined £500,000. Nigel Mercer has been fined £250,000 and received a severe reprimand.

The misconduct finding related in particular to the accounting and disclosure of Autonomy’s sales of hardware and the company's sales of software licences to value added resellers (VARs).

Tech giant HP bought Autonomy in 2011 but a year later it wrote down the value of the British company by $8.8 billion.