Spanish courts this week opened up disciplinary proceedings against the auditing company who worked with frozen fish giant Pescanova for over four years.
In July of 2013 it emerged that Pescanova had deliberately fabricated deals incorporated into financial results to disguise a €3.28 billion debt.
The tone of the Pescanova fall-out changed in September of last year, when then 5% shareholders Cartesian Capital launched legal action against BDO, stating that “if you look at scale, length of fraud, and profile of Pescanova as a company, it is hard to understand how the auditor did not see something was wrong.”
A spokesperson for Cartesian Capital said at the time: “We are not talking about €30 million here but more than €3 billion – it is hard to see how an independent auditor doing its job correctly could let this happen”.
This started the debate regarding BDO's culpability in the furore, with the company arguing that within its limitations, it could never have discovered the fraud.
However, Spain's Institute of Accounting and Auditing (ICAC) and the Ministry of Economy, believes that BDO did not do its job correctly.
If found criminally negligent, the ICAC has a period of one year to decide whether to impose a fine or suspension of the auditor as punishment. The vast majority of cases opened by the ICAC are, as in this case, a serious violation. According to industry figures, 510 of the sanctions imposed by the ICAC since 1993, 493 (97%) have been a serious violation, with total fines of €53.3 million.
© 2014 - European Supermarket Magazine by Enda Dowling
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