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Deloitte reviewing summons over Steinhoff audit

Jun 13 2018 15:18
Tehillah Niselow

Johannesburg - The Deloitte branch in the Netherlands has received a writ of summons from Dutch investor group, the VEB, over its audit of Steinhoff, and is currently reviewing the document, according to Lwazi Bam, CEO of Deloitte Africa.

Bam added in an emailed response that Deloitte Netherlands had indicated it would not provide any further comment.

The VEB announced on its website on Tuesday that it had served Deloitte Netherlands with a summons to appear before the District Court of Rotterdam "for the damage suffered by the Steinhoff shareholders".

The VEB in February began a class action suit against Steinhoff after more than 85% of its share price was eroded, following the December 2017 revelations that the international retailer’s financial statement could not be relied upon.

The Dutch investor representative group has blamed Deloitte Netherlands, as Steinhoff’s external auditors, for the murky financial statements.

"Deloitte has seriously failed in its statutory task as auditor, and has wrongly issued an unqualified auditor's report to the Steinhoff annual accounts for 2016."

"Partly as a result of the misleading financial statements with Deloitte's unqualified auditor's report, Steinhoff investors suffered billions of euros in damages," the VEB statement read. The VEB has asked how Deloitte was able to evaluate Steinhoff’s property portfolio in the financial statements, and what mechanisms were used to approve Steinhoff’s cash position. Steinhoff is uncertain about the actual value of more than eight billion euros in assets that were part of financial statements that will need to be restated.

The VEB accused Deloitte of failing to have a "professionally critical attitude" towards the Stellenbosch-headquartered company, which is registered in the Netherlands and dual listed on Johannesburg Securities Exchange (JSE) and the Frankfurt Stock Exchange (FSE).

"In view of the large range of long-term irregularities, questions can also be raised about the quality of the transfer of control from Deloitte & Touche South Africa to Deloitte Accountants BV, which took place in the spring of 2016," the VEB said.

In an interview with Fin24 in February, Bam, as Deloitte Africa CEO, said the firm was confident its conduct as the global retailer's auditor was above board.

Deloitte raised a series of questions about Steinhoff’s 2016/ 2017 financial statements before finalising its audit opinion in December, and decided, together with the international furniture retailer, that these should be answered by an independent investigation by another auditing company, PricewaterhouseCoopers.

The Dutch Authority for the Financial Markets (AFM) announced in December that it would probe the Dutch branch of Deloitte & Touché, which had issued a clean opinion of the 2015/2016 Steinhoff financial statements. The AFM said that the statements no longer met the requirements as per Dutch law.

Deloitte SA is being investigated by the Independent Regulatory Board for Auditors (IRBA) for the company’s audit opinions for Steinhoff for 2014, 2015 and 2016.

Meanwhile Steinhoff’s share price was R1.27, down 1.55% on the JSE on Wednesday at 13:48.

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steinhoff  |  deloitte  |  veb  |  retail
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