Deloitte unit admits role in false audit report

WASHINGTON: The Brazilian unit of accounting firm Deloitte has admitted to wrongdoing and will pay US$8 million (RM35.5 million) to settle civil charges that it issued and tried to cover up false audit reports, said United States regulators on Monday.

The Public Company Accounting Oversight Board (PCAOB) said the fine against Deloitte Touche Tohmatsu Auditores marked the largest civil penalty it had ever imposed, and that it had separately sanctioned 12 former partners and other officials for their role in the scheme.

All but one of those 12 had been barred or suspended from working in the industry, said the PCAOB.

Heloisa Montes, a spokesman for Deloitte Brazil, said the conduct described was “wholly incompatible with our culture” and that the individuals involved left the firm as soon as the problems were uncovered.

She added that the firm had also settled parallel charges with Brazil’s securities regulator and that new leadership, which took effect in June, “has worked aggressively to uphold the highest standards of professionalism”.

The PCAOB charges against Deloitte Brazil are considered to represent the most serious misconduct the watchdog has ever uncovered.

Deloitte Brazil is now the first-ever global network firm to admit to wrongdoing in a settlement, the first to be hit with securities fraud charges and the first to be accused of failing to cooperate with a PCAOB probe.

At issue in the case are Deloitte’s “materially false” audit reports for 2010 financial statements issued by an unnamed Brazilian airline corporate client. Reuters