Auditor Deloitte Fined A Record $8 Million For Massive Fraud

www.zerohedge.com | 12/5/2016 | Staff
j.moomin (Posted by) Level 3
Remember when auditors were, by their very definition, supposed to be the embodiment of credibility, trustworthiness and moral fiber? The Brazilian arm of Big Four auditing giant, Deloitte, forgot these simple prerequisites and as a result the US auditing watchdog fined the firm a record $8 million for what amounts to massive fraud: falsifying audit reports, altering documents and providing false testimony during an investigation that unearthed what it described as its “most serious” finding of misconduct.

The US Public Company Accounting Oversight Board, or PCAOB, also penalized or barred 12 former partners, including a national practice director, and auditors of the Brazil-based Deloitte Touche Tohmatsu Auditores Independentes.

Deloitte - Brazil - Case - Time - PCAOB

The Deloitte Brazil case is the first time the PCAOB has "charged a member of the Big Four auditing firms with fraud and for failing to co-operate with an investigation" according to the FT. Worse, unlike banks which resolve similar cases without admitting or denying guilt, in settling, Deloitte Brazil admitted it had violated quality control standards and failed to co-operate with the auditing board’s inspection and subsequent investigation.

“This is the most serious misconduct we’ve uncovered. It’s cover-up after cover-up after cover-up,” Claudius Modesti, director of enforcement at the PCAOB, said. “As an investor you’re expecting that the audit was done properly and sufficiently and that wasn’t the case here.”

Case - Details - Account - Third-world - Crime

Not only was that not the case, but the details read like straight out of a fictional account of third-world crime.

As the FT details, the PCAOB alleges Deloitte knew that its client, low-cost airline Gol Linhas Aéreas Inteligentes, did not have enough evidence to support “a potentially material amount of the maintenance deposits” that it was reporting. Deloitte’s senior auditors also knew the books were being reviewed for potential material misstatements when it released its audit report and signed off on the accuracy of the...
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