The Public Company Accounting Oversight Board (PCAOB) has sanctioned former senior partners of Deloitte Turkey in connection to an incident where documents were improperly altered ahead of a PCAOB inspection in 2014.
Hüseyin Gürer and Gökhan Alpman, former senior partners and former CEOs of Deloitte Turkey, were barred from associating with any PCAOB-registered accounting firms as the US watchdog found they were aware of efforts within the firm to improperly alter documents in advance of a 2014 PCAOB inspection and did not attempt to stop it.
In 2016 Deloitte Turkey self-reported the entirety of its misconduct to the PCAOB, sparking the Board’s investigation.
In December 2017 the Board announced that Deloitte Turkey would be fined a $750,000 civil money penalty and charged with violating quality control and ethics standards as James R. Doty, PCAOB Chairman at the time, said the firm and senior personnel had tried “to thwart PCAOB oversight through deception”.
The “elaborate plan” involved downloading archived documents onto laptops disconnected from the firm’s network and making these laptops available to three audit teams whose work was to be reviewed by the PCAOB. Date and time settings on the laptops were changed and documents were altered and provided to the PCAOB inspectors without disclosure of the alterations.
Following the revelations Deloitte Turkey employees Berkman Özata and Şule Firuzment were censured and barred for their involvement.
Claudius B. Modesti, director of PCAOB enforcement and investigations said: “The orders announced today make clear that, far from setting an appropriate tone at the top, Deloitte Turkey’s former CEOs directly and substantially contributed to the firm’s ethical lapses and are facing the serious consequences of that behaviour.”
The watchdog said that Deloitte’s decision to self-report ultimately allowed it to avoid harsher consequences.
Similarly, Gurer and Alpman were given reduced sanctions as the Board said they provided “extraordinary cooperation in the investigation”.
A third senior partner, Ömer Tanriöver, the former risk and reputation leader, was also barred by the PCAOB for failing to co-operate with their investigation.
Claudius B. Modesti, Director of PCAOB Enforcement and Investigations said that the imposition of the severest of sanctions on Tanriöver “demonstrates the importance of cooperating with PCAOB investigations”.
Gurer may apply to have his bar lifted after three years and Alpman after two, while Tanriöver is banned for life.
Gürer was also fined $25,000 and all three were censured by the Board’s orders.
The investigation of Deloitte Turkey was conducted by Alan Lo Re, with the assistance of Tiffany Johnson and the investigative team was supervised by William Ryan and Marion Koenigs.