DELOITTE, the Big Four accountancy firm, was dealt a new blow yesterday when a watchdog announced an investigation into its auditing of MG Rover.

The Accountancy Investigation & Discipline Board (AIDB) will examine audits of the 2003 accounts of MG Rover and its parent company, Phoenix Venture Holdings. It is believed to be concerned about tax avoidance and fees paid to Deloitte for additional services.

The investigation is separate to an existing inquiry launched in May by the Department of Trade and Industry into the causes behind the carmaker’s collapse. In 2002, Deloitte received £4 million from MG Rover, including £500,000 in audit fees. The next year, the carmaker’s directors reappointed Deloitte, dropping the obligation to appoint new auditors annually.

Deloitte is facing charges in Italy over its role as auditor of Parmalat, the collapsed dairy group. In June, Italian prosecutors pressed charges against Deloitte, accusing it of helping to conceal the company’s huge problems from investors.

This year, another accountancy watchdog criticised Martin Scicluna, Deloitte’s chairman, for failing to report an employee who fraudulently obtained a car from a client.

In April, Deloitte agreed a $50 million settlement with the US Securities and Exchange Commission over its auditing of Adelphia, the bankrupt cable company. Deloitte has consistently denied any wrongdoing.

Its problems are not unique among the industry. The AIDB has been investigating PricewaterhouseCoopers over its auditing of the collapsed engineering group Mayflower, while Ernst & Young has been contesting a negligence claim from Equitable Life. KPMG is being sued for £300 million for alleged negligence over the audit of Independent Insurance.

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