Deloitte settles with SEC for $50mn
Deloitte & Touche LLP agreed to pay more than $50 million to settle charges brought against it by the Securities and Exchange Commission related to two former audit clients. The payments are part of separate settlements related to the Big Four firm's 2000 audit of cable giant Adelphia Communications Corp. and the 1998 audit of Birmingham, Ala.-based Just For Feet, a defunct shoe and sports apparel retailer. Deloitte did not admit or deny wrongdoing in either case.
As part of the Adelphia settlement, Deloitte & Touche will pay a $25 million penalty to settle the federal court action, and another $25 million to settle the administrative proceeding. The entire $50 million will be paid into a fund to compensate Adelphia shareholders and debt holders. The firm also agreed on steps to enhance audit quality for its clients.
As part of the Just For Feet settlement, the firm agreed to be censured and to pay $375,000 to the U.S. Treasury. The SEC also charged the Deloitte engagement partner, Steven H. Barry, and the audit manager, Karen T. Baker, who agreed to be barred from practicing before the SEC for two years and one year, respectively.
Deloitte claimed that it was "deliberately misled" in both cases by client management, but the SEC later admonished the firm for trying to deflect the blame.
Roadmap for standards equivalence
Officials from the Securities and Exchange Commission and the European Union Commission have reached an agreement on a "roadmap" toward equivalence between international and U.S. accounting rules.
The roadmap sets out steps that the SEC will take to eliminate the need for European companies using International Financial Reporting Standards to reconcile to U.S. generally accepted accounting principles possibly as soon as 2007, but no later than 2009, EU Internal Market Commissioner Charlie
McCreevy said in late April. Currently, European companies doing business in the U.S. have to conform to GAAP rules, which means keeping two sets of books.
The accord moves forward an ongoing convergence project undertaken by accounting standard-setters on both sides of the globe. "Clearly there is much to do all round, but the bandwagon has now started," McCreevy said of the accord.
SEC chair William Donaldson cautioned that the ultimate success of IFRS "will depend on many parties, including companies, auditors, standard-setters and regulators," but added that he is "glad that all parties are taking on the challenge."
GAO issues gov't audit CPE rules
The Government Accountability Office has issued extensive new guidance for auditors and audit organizations in implementing revised continuing professional education requirements for those conducting so-called "Yellow Book" audits. The CPE requirements, which were prescribed in a 2003 revision of government auditing standards, apply to external auditors and internal auditors, both governmental and non-governmental, who perform audits or attestation engagements conducted in accordance with generally accepted government auditing standards.
The fundamental difference related to CPE in the 2003 standards from the 1994 revision is that the 80 hours of CPE to be completed every two years should "directly enhance the auditor's professional proficiency to perform audits and/or attestation engagements." The 1994 revision called for training that "contributes to the auditor's professional proficiency."
The GAO also issued a technical amendment to Paragraph 3.45 and related footnotes of the CPE requirements contained in the competence standard of the 2003 revision of GAGAS.
The guidance document and the technical amendment, available at www.gao.gov/new.items/d05568g.pdf, are effective for CPE measurement periods beginning on or after June 30, 2005. Early application is encouraged.
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