SEC suspends ex-Deloitte risk officer over audit work

by Richard Crump

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21 May 2014

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A FORMER Deloitte chief risk officer has been suspended from auditing public companies for two years after settling allegations he violated auditor independence rules, the US Securities and Exchange Commission said.

The SEC order found that James Adams breached rules governing auditor independence by accepting tens of thousands of dollars in casino markers - used by casino customers to receive gaming chips drawn against their line of credit - while he was the advisory partner on subsidiary Deloitte & Touche's audit of a casino gaming corporation.

Adams concealed his casino markers from Deloitte and lied to another partner when asked if he had casino markers from clients of the firm, the SEC said.

"The transactions by which Adams accepted the casino markers were loans from an audit client that are prohibited by the auditor independence rules," said Scott Friestad, associate director in the SEC's division of enforcement. "

Auditor independence is critical to the integrity of the financial reporting process. Through his extensive use of casino markers, Adams clearly violated the rules and put his own desires ahead of his client's interests."

Scott Schreiber, a partner at law firm Arnold & Porter representing Adams, was unavailable for comment.

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