Accounting watchdogs are examining the role of RSA’s former auditor Deloitte in Ireland over the irregularities that left the FTSE 100 insurer with a £200m hole in its accounts
January 12, 2014 Leave a comment
January 10, 2014 9:48 pm
Accounting watchdogs to look at RSA auditors
By Alistair Gray, Insurance Correspondent
Accounting watchdogs are examining the role of RSA’s former auditor Deloitte in Ireland over the irregularities that left the FTSE 100 insurer with a £200m hole in its accounts.The Chartered Accountants Regulatory Board in the Republic is liaising with the Financial Reporting Council in the UK as well as the Central Bank of Ireland, which is already conducting an investigation into RSA.
Carb, which has powers to issue accounting firms with penalties of up to €100,000 per partner, confirmed that it was “monitoring the situation”. Neither it nor the FRC has launched a formal investigation.
Deloitte said on Friday that it had not seen a copy of a report that RSA commissioned PwC to prepare, nor a review the insurer had conducted itself, into what went wrong at the insurer’s Irish arm.
The firm – which as well as auditing the parent company’s accounts, also scrutinised the books of RSA’s Ireland subsidiary until the insurer changed its auditors in May – said it was not in a position to comment.
RSA, which sells car, home and travel cover under the More Than brand in Britain, this week pinned the blame for the past overstatement of profits in Ireland on the individual actions of senior executives.
But in spite of the company’s efforts to draw a line under the scandal, leading shareholders and analysts said on Friday they were far from convinced RSA could not have prevented the difficulties.
One top 20 shareholder said he still had concerns about RSA’s reserving procedures throughout its disparate global businesses in spite of reassurances from Martin Scicluna, chairman.
Christopher Esson, analyst at Credit Suisse, said the conclusion of a review by the group’s new auditor KPMG that the problems were isolated to Ireland provided only “some comfort”.
He said investor confidence in the adequacy of RSA’s reserves was still “fragile”. “This needs to be addressed by increased disclosure,” he said in a report on Friday
RSA acknowledged this week that there were “lessons to be learnt” from the scandal.
The insurer reiterated on Friday that it would update investors on the outcome of a review it conducts each year into the reserves across the business when its publishes full-year results next month.
The Credit Suisse analysts also suggested RSA raise £300m of new equity as part of a plan to rebuild its balance sheet.
However, one shareholder warned of any cash call: “It would be unpalatable, especially without a new chief executive.”
About bambooinnovator
Bamboo Innovator 