PCAOB Sanctions Deloitte & Touche S.A.S. for Quality Control Violations

The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order sanctioning Deloitte & Touche S.A.S. (“DT Colombia” or the “Firm”) for violations of PCAOB rules and quality control standards in connection with a 2016 audit.

The PCAOB found that DT Colombia’s system of quality control failed to provide it with reasonable assurance that audit work would be performed and documented in accordance with PCAOB standards. As detailed in the order, multiple Firm personnel performed audit procedures, obtained audit evidence, and substantially altered audit documentation after issuance of a 2016 audit report, yet the Firm’s system of quality control did not prevent or detect these violations. 

The PCAOB also found that DT Colombia’s system of quality control did not provide the Firm with reasonable assurance that its personnel would maintain independence (in fact or appearance) in all circumstances. In one instance, the Firm used impermissible indemnification language in an engagement letter. In two other instances, the Firm failed to timely remove personnel with known financial conflicts from an audit engagement.

“Firms must establish and implement effective systems of quality control to support compliance with all relevant auditing and independence requirements,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations, “As today’s order shows, when firms fail to do so, we will not hesitate to take action.”

Without admitting or denying the Board’s findings, DT Colombia consented to the PCAOB’s order, which censured the Firm and imposed a $900,000 civil money penalty. DT Colombia is also required to undertake certain remedial measures to establish, revise, or supplement its quality control policies and procedures to give it reasonable assurance that its personnel and other associated persons will comply with PCAOB standards and maintain independence in all required circumstances. DT Colombia audit personnel must also take 20 hours of training related to U.S. GAAP, PCAOB rules and standards, and U.S. Securities and Exchange Commission reporting requirements, rules, and regulations.

PCAOB enforcement staff members Michael C. Occhuizzo, Ramón L. Torres, and David Eccard conducted the investigation, supervised by William Ryan and John Abell.

The PCAOB oversees auditors’ compliance with the Sarbanes-Oxley Act, provisions of the securities laws relating to auditing, professional standards, and PCAOB and SEC rules. Further information about the PCAOB Division of Enforcement and Investigations is available on the PCAOB website. Firms or individuals wishing to report suspected misconduct by auditors, or to self-report possible misconduct, may visit the PCAOB Tips and Referrals page.

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About the PCAOB

The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers, including compliance reports filed pursuant to federal securities laws.

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