The auditing watchdog in the United States has imposed a record fine of $8 million on global audit firm Deloitte's Brazilian arm for issuing false reports to a US-traded Brazilian airline and then manipulating papers to thwart an investigation into the matter.
The Public Company Accounting Oversight Board (PCAOB) — the regulator for US auditing firms — has found that Brazil-based Deloitte Touche Tohmatsu Auditores Independentes issued materially false audit reports to GOI Intelligent Airlines in 2010, according to the Financial Times.
"Brazil-based Deloitte Touche Tohmatsu Auditores Independentes 'knowingly issued materially false' audit reports for Brazilian carrier Gol Intelligent Airlines in 2010," the regulator said in a statement.
During investigation into the matter in 2012, several Deloitte Brazil personnel also tried to obstruct the enquiry by directing junior staff to alter documents to conceal their wrongdoings, the report said.
"This is the most serious misconduct we have uncovered. It's cover-up after cover-up after cover-up. As an investor you are expecting that the audit was done properly and sufficiently and that wasn't the case here," the report quoted Claudius Modesti, the director of enforcement at the PCAOB, as saying.
Apart from the fine, Deloitte Brazil would also appoint an independent monitor to look into the matter and is barred from accepting any new clients until it meets the remedial benchmarks.
The regulator also imposed penalty on a dozen former Deloitte Brazil officials, including the former audit practice leader, who was permanently barred from the industry.
In a separate case, the auditing watchdog had fined Deloitte Mexico $750,000 for altering documents in a different audit.
Meanwhile, the audit firm admitted to violating quality standards and said it would cooperate in the investigation. "Integrity in delivering high-quality services is critical to our business, our clients and the public interest; it is non-negotiable. Actions of 'a limited number' of individuals were 'wholly unacceptable'," Deloitte said in a statement, according to the report.
