Deloitte auditors agree to stop practicing

Two audit partners at
& Touche
have agreed with the US’s
Securities and Exchange
to be barred from practicing to resolve a case involving auto
parts maker Delphi.

The case stems from Delphi misclassifying a $112m increase in its warranty
reserves as a charge to stockholders’ equity rather than to warranty expenses
for the current period. The misclassification in the second quarter of 2000 was
reflected in Delphi’s quarterly and annual financial statements, WebCPA

SEC said audit partner Nicholas Difazio should not have accepted Delphi’s
view that it could use special accounting rules rather than the accounting rules
which generally apply to contingencies and changes in estimates on warranty

Duane Higgins, the other Deloitte audit partner who faced SEC sanctions, was
also blamed for not investigating Delphi’s repurchase of cores and batteries
more closely. SEC also found fault with his review and audit of the sale and
purchase of precious metals.

Further reading:

Delphi to slash bonuses to exit bankruptcy

Deloitte agrees to pay ?19m to Delphi Corp

story in WebCPA

Related reading