Truck maker Navistar International has filed a $500 million lawsuit against its former auditor Deloitte & Touche alleging professional malpractice.
The Warrenville, Ill.-based company was forced to revise its financial statements for 2002 to 2005 and it blamed the auditors at Deloitte for not doing a better job.
“Deloitte lied to Navistar and, on information and belief, to Deloitte’s other audit clients, as to the competency of its audit and accounting services,” said the complaint, according to Bloomberg.com.
"Unbeknownst to Navistar, Deloitte's internal quality control problems were so pervasive that the chance of 'competent' accountants and auditors being assigned to Navistar's and Deloitte's other clients was as random as roulette," the complaint added, according to Reuters.
Deloitte said it would contest the lawsuit. “Navistar’s complaint is a cynical and baseless attempt to try to shift responsibility for the wrongdoing of Navistar’s own management," said Deloitte spokesman Jonathan Gandal in an e-mailed statement. "Several members of Navistar’s past or present management team were sanctioned by the SEC for the very matters alleged in the complaint. This claim is without merit and we will defend ourselves vigorously.”
The restatements related to issues involving warranties and product development programs for suppliers, as well as underpayment of taxes and how Navistar booked pension reserves. The company needed to record nearly $2 billion in pretax charges and additional income taxes owed. Delays in filing its restatements caused the company to temporarily be delisted from the New York Stock Exchange.
In 2007, the truck manufacturer replaced Deloitte with KPMG as its outside auditor. It also hired 50 additional accounting employees and strengthened its finance and accounting reporting structure and internal controls.
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