Deloitte to pay $2 million to settle charges over audit rule violations

Tue Oct 22, 2013 7:31pm EDT
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By Sarah N. Lynch

WASHINGTON (Reuters) - Deloitte & Touche DLTE.UL will pay a $2 million penalty to settle civil charges that it violated federal audit rules, in one of the largest civil penalties ever imposed by the U.S. audit watchdog.

The Public Company Accounting Oversight Board, which is tasked with policing auditors, said on Tuesday that it was censuring Deloitte for allowing its former partner to continue participating in the firm's public company audit practice, even though he had been suspended over other rule violations.

The former partner, Christopher Anderson, settled with the PCAOB in 2008 by agreeing to a $25,000 fine and one-year suspension after the watchdog said he violated rules during a 2003 audit of the financial statements for a unit of Navistar International Corp (NAV.N: Quote).

A spokesman for Deloitte said the company is pleased the matter has been resolved. "Deloitte takes very seriously all orders and actions of the PCAOB," the spokesman said.

The penalty matched a record PCAOB fine last year against Ernst & Young.

The PCAOB was created by the 2002 Sarbanes-Oxley Act in response to the accounting scandals at companies like Enron and Worldcom. It sets audit standards, conducts routine inspections and disciplines rule breakers in the audit industry.

The oversight board said on Tuesday it first launched disciplinary proceedings against Deloitte in March, but because of secrecy provisions in the Sarbanes-Oxley law, the board was not able to make them public until now.

"When the board suspends an auditor, it does so to protect investors," said James Doty, the head of the PCAOB.   Continued...

The Deloitte Company logo is seen on a commercial tower at Gurgaon, on the outskirts of New Delhi August 9, 2012. REUTERS/Parivartan Sharma