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Deloitte Refutes False Accusations

The advisory firm Deloitte strongly rejects the false accusations regarding the distortion of its accounting records and the alleged existence of slush funds as published in two recent articles run by Lidové noviny.

Česky: Deloitte odmítá nařčení (Poradenská společnost Deloitte zcela jednoznačně odmítá nepodložená nařčení ze zkreslování vlastního účetnictví...)

In view of the already apparent negative impacts on the firm involving the harm to its good reputation in winning public contracts, Deloitte engages a reputable law firm to provide advice on a further course of action, including the possibility of seeking compensation for damage.

“No slush fund used for bribing state employees in winning state contracts exists,” said Michal Petrman, Office Managing Partner of Deloitte Czech Republic. “Likewise, I am unaware of any alleged investigation being conducted against our firm in this respect by the Unit for Investigating Corruption and Financial Crimes of the Criminal Police and Investigation Service (the “anti-corruption police”). I can also confirm that based on the information published by Lidové noviny we ourselves have contacted this police unit offering our full cooperation and assistance should such an investigation be launched. In addition, the statement the head of the anti-corruption police made to Deloitte Advisory has denied the existence of any investigation of Deloitte Advisory in this respect,” added Petrman. 

Petrman stated that Lidové noviny published misleading information about the distortion of accounting records. “Roughly a month ago, our internal controls tools revealed certain deficiencies in the reporting of long-term engagements in the management system of our Consulting function,” said Petrman. Those deficiencies were caused by the application of a different reporting methodology and resulted in the premature recognition of revenues in the management system.

Deloitte Advisory is currently in the process of issuing its financial statements for 2009, together with an independent auditor’s report. In these financial statements, the firm is reporting that the revenues for 2008 were overstated by CZK 29.8 million. This amount, which increased sales and the tax base, represents less than 2% of the firm’s annual revenues. The major part of the differences was reported in the preliminary figures for 2009 and the interim results for the first four months of 2010. Deloitte Advisory has used the corrected information in preparing the financial statements for 2009. “We ourselves detected and rectified the deficiencies in accordance with all relevant regulations and internal policies. The issue will only have an internal impact on the evaluation of partners and the evaluation of the performance of individual segments of the firm’s business,” said Petrman.

The sudden resignation of Petr Kymlicka, the former partner in charge of Deloitte’s Consulting function, has also been linked in the articles with this information. As the firm has repeatedly stated Mr Kymlička resigned on the basis of mutual agreement which was the result of ongoing differences of opinion on the management of the Consulting function. “As such, this is a completely normal personnel situation which occurs in many companies and which should not result in any unsubstantiated speculation being made,” added Petrman.