- A former audit partner of Deloitte in the Netherlands has been found guilty by a Dutch accountancy body for his work on Steinhoff.
- Patrick Seinstra acted "contrary to the fundamental principle of professional competence and due care", according to the ruling.
- Deloitte says the judgment did not take into account the very complex audit, nor that Seinstra discovered the management fraud under very difficult circumstances.
The audit giant Deloitte has expressed disappointment after one of its former audit partners was found guilty by a Dutch disciplinary court, which slated his work on the Steinhoff accounts.
The Netherlands Authority for the Financial Markets (AFM) lodged charges against Patrick Seinstra at the Accountantskamer, a legal body that assess complaints against accountants.
Seinstra testified at a hearing in April, and the guilty ruling was delivered earlier this month.
Seinstra, who worked for Deloitte in the Netherlands, awarded Steinhoff an unqualified auditor’s report for 2016, Netwerk24 reported.
PwC later found that former Steinhoff executives inflated the group's profit and asset values by more than R100 billion through various accounting tricks and fake transactions in the period between 2009 and 2017.
The AFM levelled six charges against Seinstra, including that he didn’t properly evaluate the sale of intangible assets by Steinhoff.
In his testimony, Seinstra said that he was lied to by Steinhoff, and that his team from Deloitte discovered the fraud in 2017. They refused to sign off on the statements following the discovery. He was in South Africa at the time, and testified that he felt unsafe following the decision - even resorting to barricading his hotel room door at night, Netwerk24 reported at the time.
The auditing disciplinary court found him guilty on all counts, and said that he acted "contrary to the fundamental principle of professional competence and due care". It was also found that Seinstra failed in securing "sufficient and appropriate audit evidence". He was also seen as "insufficiently professionally critical" in his assessments.
His sanction is for his registration as an accountant to be suspended for three months.
A Deloitte spokesperson told Fin24 that the judgement of the Disciplinary Court was disappointing.
"First of all because the Disciplinary Court has in no way taken into account the very complex audit, nor the fact that Deloitte's accountant discovered the management fraud under very difficult circumstances. The Audit Chamber also failed to take into account the fact that Deloitte's auditor was deliberately misled, both by Steinhoff's management and by the responsible auditor (component auditor, not Deloitte) of Steinhoff's European group unit."
In February, Deloitte in the Netherlands and SA agreed to pay €70.3 million (circa R1.2 billion) in compensation to claimants suing Steinhoff as part of a global settlement proposal.
At the time, the auditor said the global settlement was in the "best interest of all stakeholders". It noted that the settlement was not in any way an admission of any liability.