Criticisms Hit Deloitte After Appointing Ex-RBS Auditor As Chairman
The appointment of Steve Almond who formerly audited the failed Royal Bank of Scotland (RBS) as the new Deloitte chairman has angered institutional investors.
Almond succeeded John Connolly, who served as chairman of the board from 2007 until May 31 this year.
Commenting on Almond’s appointment, Deloitte Global Chief Executive Officer Barry Salzberg said his “relentless focus on quality and client service and extensive global client experience will be significant assets in helping us advance the Deloitte organization’s leadership in the marketplace.”
But a group of investors were not happy at all. They slammed the appointment of Almond who audited the accounts of RBS between 2005 and 2009. The bank collapsed during the height of the global financial crisis.
They said the appointment would not help in evaluating the faults of both the global auditors and the international accounting standards in the lead-up to the economic crisis.
Experts blamed the International Financial Reporting Standards (IFRS) for the massive distortion of banks accounts since the international accounting standards was first introduced in 2005.
“Disappointing.” This was how Alan MacDougall, head of Pensions & Investment Research Consultants (PIRC), described Almond’s appointment.
“Given the centrality of the audit to protecting the interests of shareholders, and given the amount of shareholder funds lost in the case of RBS including the rights issue in early 2008, this appointment requires some explaining to shareholders,” he said.
Another investor said Almond’s appointment “epitomises” the “tight group that has no interest in shining a light into the industry,” which dominates the audit firms and the standards they operate.
However, Deloitte denied any restatements in the banks’ reports. The accounting and consulting firm said there was no issue of audit quality that has been identified albeit the high degree of scrutiny by industry regulators.
Almond said “during the recent economic downturn, Deloitte member firms brought the full breadth of the global network’s resources to help clients adapt to the new market realities, while maintaining an unyielding focus on quality.”
In his many years in the professional services industry, Almond said he has learned “firsthand the importance of effective governance and have served under a board that truly represents the best in our business and the industry.”
Almond was previously the Deputy Global Chief Executive Officer of Deloitte. More previously than that, he served as Deloitte’s Global Managing Director for four years.
Almond earned his Bachelor’s degree from the University of London. He is a Fellow of the Institute of Chartered Accountants in England and Wales, a member of the Deloitte UK Executive, and sat on the Deloitte UK Board for almost 15 years.