Only Money—Deloitte Pays Another Fine And Then Moves On

For Deloitte, the song goes like this: Do the crime, pay the fine, the firm does no time, survive and thrive.

The Public Company Accounting Oversight Board censured Deloitte & Touche LLP yesterday and imposed a $2 million civil penalty against the firm for violating the Sarbanes-Oxley Act and PCAOB rules when it permitted Christopher E. Anderson, a former partner to perform or continue to perform activities as an
“associated person” that were prohibited while he was subject to a PCAOB suspension order.

Anderson was the partner on Deloitte’s Navistar audit engagement, based in the Chicago office. Anderson was the first individual fined or suspended by the Public Company Accounting Oversight Board, barred for a year and fined $25,000 in October 2008 because he “violated PCAOB standards” by agreeing “without a reasonable basis” to accounting decisions by Navistar Financial Corp in 2003 that led to restatements, SEC investigations, delisting and numerous lawsuits including by Navistar against Deloitte. (That lawsuit settled recently on a confidential basis but the amount was rumored to be close to $25 million.)

Anderson is not the only partner responsible for a large audit failure hiding under Mother Deloitte’s skirts. Nicholas Difazio was suspended in 2008 by the SEC, barred for three years from practicing before it as an accountant, for his role as the partner on the Delphi audit failure. (Difazio was even flipped by the SEC after being sanctioned for his negligent audit and used to strengthen the regulator’s case against Delphi executives by saying the executives “duped” him.)

Difazio has yet to be reinstated by the SEC but he’s been working for Deloitte ever since. DiFazio is still a partner in Deloitte LLP, the public accounting firm, leading the firm’s IFRS practice. He advises issuers on IFRS conversion, writes whitepapers, stars in webcasts, and speaks to academics, regulators and issuer groups about the challenges and opportunities of changing accounting standards.

Until this week, you could also find him prominently featured on the Deloitte website.