PCAOB Sanctions Former Deloitte Brazil Chairman and CEO for Violations Related to Failures to Cooperate with a Board Investigation
The Public Company Accounting Oversight Board today announced sanctions against the former Chairman and the former Chief Executive Officer of Brazil-based Deloitte Touche Tohmatsu Auditores Independentes for violations related to failures to cooperate with a Board investigation.
In today's orders, the PCAOB found that Michael John Morrell, the former Chairman of Deloitte's governing body in Brazil, contributed to the firm's failure to cooperate with a PCAOB investigation. Also, Juarez Lopes de Araújo, Deloitte Brazil's former CEO and managing partner, refused to cooperate with the investigation.
These actions follow a December 2016 PCAOB enforcement order against Deloitte Brazil in which the Board found that the firm and certain individuals attempted to cover up audit violations, including through improper alteration of documents and provision of false testimony to investigators.
"The order announced today against the former Chairman of Deloitte Brazil makes clear that the misconduct at the firm went all the way to the top, and our investigation persisted until we uncovered the extent of wrongdoing," said Claudius B. Modesti, Director of PCAOB Enforcement and Investigations. "The order against the former CEO demonstrates that individuals who refuse to cooperate with Board investigations face some of the stiffest sanctions."
According to an order released today, Morrell became aware during the investigation into Deloitte Brazil that firm personnel had improperly altered work papers and were giving false documentation and information to PCAOB investigators. He concurred in the plan to continue misleading the PCAOB.
The PCAOB order censures Morrell, bars him from associating with a PCAOB-registered firm for five years, and imposes a civil penalty of $35,000.
In another order, the PCAOB sanctioned Araújo for refusing to testify in the PCAOB investigation about any knowledge he had of the firm's provision of false documents and information to PCAOB investigators.
The PCAOB order censures Araújo and permanently bars him from associating with a PCAOB-registered firm.
Morrell and Araújo neither admitted to nor denied the findings in their respective orders. Neither is currently associated with Deloitte Brazil.
The investigation of Morrell and Araújo was conducted by PCAOB enforcement staff members David Ware, Carol Der Garry, Arthur Lowry, and Tiffany Johnson, and was supervised by William Ryan and Marion Koenigs.
The PCAOB oversees auditors' compliance with the Sarbanes-Oxley Act, professional standards, and PCAOB and Securities and Exchange Commission 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 Tip & Referral Center.