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The U.K.'s Accountancy Investigation and Discipline Board is believed to be looking into possible tax avoidance at bankrupt automaker MG Rover.
Stephen Taub, CFO.com | US
June 17, 2005
Deloitte & Touche is being probed as part of a larger investigation concerning possible tax avoidance at its audit client MG Rover, a collapsed British carmaker, according to The Times of London.
According to the Times, the Accountancy Investigation and Discipline Board — an independent investigative and disciplinary body for accountants in the United Kingdom — is believed to be looking into possible tax avoidance at MG Rover as well as the fees paid to Deloitte for additional services.
The newspaper added that in 2002, Deloitte received £3.5 million ($5.6 million) for non-audit services in addition to £500,000 in audit fees.
The AIDB has the power to reprimand accountants and accounting firms or impose an unlimited fine if it uncovers wrongdoing, the Times noted.
MG Rover, Britain's last big carmaker, was well-known as the manufacturer of Triumphs and Austins in addition to Land Rovers. The company was bought by BMW in 1994, but as its financial health failed, it was sold to British investors in 2000 for a token amount. Earlier this year the company's onetime partner Shanghai Automotive Industry Corp. abandoned efforts to acquire MG Rover, and the company declared bankruptcy. About 6,000 factory workers lost their jobs, reported The New York Times.
According to The Times of London, last week MG Rover's administrators, PricewaterhouseCoopers, stated that shortly before the car company's collapse, it had been advised several times by financial and legal advisers that it was fit to keep trading. PwC made this statement, the Times added, following concern from MG Rover's creditors that the company had traded while insolvent.
A spokeswoman for Deloitte told the paper, "We are satisfied with the opinions given in the financial statements and would fully assist with any inquiry."