NEW YORK, April 27 – LAWFUEL – The Law News Network — Deloitte & Touche LLP announced today it is pleased to have reached settlements related to the 2000 audit of
Adelphia and the 1998 audit of Just For Feet. Each of these cases involves a
consent decree, signed by Deloitte & Touche LLP, in which it neither admits
nor denies wrongdoing. These two settlements are the first enforcement cases
for Deloitte & Touche LLP since Deloitte & Touche was formed by combination in
1989. Deloitte & Touche LLP believes that the settlements are in the best
interest of its people, clients and the organization.
As a condition of the Adelphia settlement, Deloitte & Touche LLP will pay
a $25 million penalty, plus a $25 million contribution to a fund to compensate
Adelphia shareholders and debt holders. Deloitte & Touche LLP also has agreed
on steps for enhancing audit quality for its clients. As part of the
settlement on Just For Feet, there will be a payment of $375,000 to the U.S.
Treasury. Neither of the settlements restricts Deloitte & Touche LLP’s
ability to provide services to new or existing clients.
In both the Adelphia and Just For Feet cases, the primary basis of the
SEC’s claim is that the audits were deficient and failed to uncover fraud
committed by the companies and certain members of their management in the face
of identified risks.
“Deloitte & Touche LLP shares with the SEC a mutual interest in
strengthening investor confidence in the capital markets through the ongoing
enhancement of higher quality audits. A key component of this entails
continuously developing and applying audit procedures to help in the timely
detection of fraud,” said James Quigley, CEO, Deloitte & Touche USA LLP.
Quigley continued, “These cases raise a larger issue facing the auditing
profession. Among our most significant challenges is the early detection of
fraud, particularly when the client, its management and others collude
specifically to deceive a company’s external auditors. Deloitte & Touche LLP
has implemented, and will continue to implement, a number of additional
improvements in its policies and procedures for auditing clients in its risk
management program and to aid in uncovering fraudulent activity in a more
timely manner.”
Finally, Quigley stated, “In our normal course of business, Deloitte &
Touche LLP is constantly improving audit processes based on new pronouncements
and standards, its internal inspection programs, and PCAOB inspections and
will continue to do so in the future. Coming out of the settlement, Deloitte
& Touche LLP will implement several changes that should help to improve the
performance of future audit engagements. These include improved audit
procedures for clients in the risk management program; more tailored audit
procedures in response to identified risks and improved documentation of the
conclusions regarding issues raised; the completion of specialized training
for all audit professionals in detecting potential fraud; and deploying
forensic specialists to assist audit teams in the planning stages of audits
for all clients in the risk management program.”
In the case of Adelphia, certain executives were found guilty of fraud,
while in the case of Just For Feet, certain executives and third party vendor
employees agreed to plead guilty to fraud charges.
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss
Verein, its member firms and their respective subsidiaries and affiliates. As
a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its
member firms has any liability for each other’s acts or omissions. Each of the
member firms is a separate and independent legal entity operating under the
names “Deloitte,” “Deloitte & Touche,” “Deloitte Touche Tohmatsu” or other
related names. Services are provided by the member firms or their subsidiaries
or affiliates and not by the Deloitte Touche Tohmatsu Verein.
Deloitte & Touche USA LLP is the US member firm of Deloitte Touche
Tohmatsu. In the US, services are provided by the subsidiaries of Deloitte &
Touche USA LLP (Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Tax
LLP and their subsidiaries), and not by Deloitte & Touche USA LLP.
