VEB issues Deloitte with writ summons
Deloitte Africa CEO Lwazi Bam confirmed on Wednesday that Deloitte in the Netherlands has received a writ of summons from VEB, the Dutch share-holder association, and is reviewing the document.
"Deloitte Netherlands has indicated it will not provide any further comment," said Bam.
Deloitte has also refused to respond to questions put to it by VEB, which is now claiming the right available under Dutch law to inspect Deloitte’s audit working papers. VEB hopes to establish whether Deloitte had a reasonable basis for issuing an unqualified auditor’s report on the 2016 financial statements.
VEB said the applicable rules and regulations require Deloitte to prepare and retain audit working papers in respect of the audit procedures it performed.
"Such audit working papers must be sufficiently complete and detailed, so that a proper picture can be formed of the performance of the audit procedures conducted at Steinhoff by Deloitte," said VEB. It said that when Deloitte (Netherlands) took over the audit in May 2016 it was required to do an "initial audit", which carries additional duties and responsibilities for the auditor.
"As group auditor, Deloitte insufficiently oversaw and/or was too passive in overseeing the various different component auditors, in particular those charged with auditing the non-South African assets, considering that there were sufficient indications of fraud," said VEB.
In January the Steinhoff supervisory board informed shareholders that the 2016 and 2015 financial statements of Steinhoff Investment Holdings needed to be restated and could no longer be relied upon.
In its summons VEB refers to Steinhoff’s statements indicating that €8bn of assets is now in doubt. "This is evidently a material misstatement on total assets of €32bn," said VEB. It said investors had relied on the accuracy and completeness of information communicated by Steinhoff and audited by Deloitte.