The head of Big Four accounting firm Deloitte defended his firm's work and reportedly suggested that Grant Thornton's former Italian affiliate may have withheld information during audit work on Parmalat, the Italian dairy giant that imploded amid allegations of widespread accounting fraud.
Deloitte's global chief executive, Bill Parrett, acknowledged that it took the firm three years to spot the alleged fraud at Parmalat, but claimed that the Italian arm of Grant Thornton, which had previously served as Parmalat's chief auditor, made Deloitte's task more difficult, the Financial Times reported this week.
"We did not perpetrate this fraud," Parrett said in an interview with the Financial Times. "It has been reported that this has been a massive fraud, which has been going on for more than a decade. It also appears that possibly other professionals were lying to our people."
Parrett said the "other professionals" were at Grant Thornton. Deloitte's Italian partnership replaced Grant Thornton's Italian business as Parmalat's chief auditor in 1999, but Grant Thornton continued to audit some of the dairy group's subsidiaries.
Grant Thornton expelled its Italian business, which prosecutors are seeking to indict, in January 2004. The trial of two former Grant Thornton auditors is due to start in 2005, according to the paper.
"Based upon the way the prosecutors have dealt with Grant Thornton," Parrett reportedly told the FT, "it would be reasonable to expect, in the final analysis, that they had information we did not have, and we wished we had."
Italian prosecutors have asked magistrates to indict Deloitte's Italian business, and two of its partners, but so far no charges have been made, according to the FT.
Deloitte raised doubts about Parmalat's accounting in October 2003 following a review of the company's interim results for the first half of 2003.
"We were the main auditor for almost three years before we uncovered this problem and reported it," Parrett said. "Do I wish we had reported it a day or two earlier? Absolutely."
The dairy group's 2002 financial statements disclosed that Grant Thornton did audit work on 49 per cent of its assets, according to the report.
