Deloitte open to settling Freedom Foods class action (copyright link)

Deloitte open to settling Freedom Foods class action

Edmund TadrosProfessional services editor

Dec 14, 2020 – 4.24pm

Save

Share

Deloitte is considering settling a class action brought against the firm over its auditing of Freedom Foods due to concerns the case would reveal unflattering information about the firm's audit quality.

Law firm Slater and Gordon launched an investor class action against Freedom Foods and its auditor Deloitte in the Supreme Court of Victoria last Tuesday.

The action came after the listed dairy, cereal and snacks maker revealed more than $590 million in write-downs and restated several years' worth of accounts.

The class action alleges Deloitte failed in its duties in signing off on Freedom Foods’ accounts each financial year between 2014 and the first half of 2020.

The firm itself identified significant irregularities in the company’s accounts going back several years as part of the 2020 financial report issued on November 30.

Accounting experts said Deloitte will need to explain why it signed off on an accounting strategy that treated substantial expenditures incurred by Freedom Foods as capital assets, and whether these assets were recorded in the accounts at excessive book values.

The restated accounts meant that Freedom Foods swung from an $11.6 million profit in 2019 to a $145.8 million loss, and the 2020 result was a $175 million loss. Deloitte signed off on the earlier accounts as well as the restated accounts.

It's understood that senior executives at Deloitte believe that the firm would be best served by settling the Freedom Foods matter instead of fighting it in court.

The concern is that unflattering information about the firm's approach to auditing would be revealed as part of the court process.

RELATED QUOTES

FNPFreedom Foods Group

$3.0100.00

1 year1 day

Dec 19Apr 20Jun 202.8004.2005.600

Updated: Dec 30, 2020 – 9.01pm. Data is 20 mins delayed.

View FNP related articles