Deloitte auditors agree to stop practicing
Two Deloitte partners involved with Delphi audits have agred with SEC case to be barred from practicing
Two audit partners at
Deloitte
& Touche have agreed with the US’s
Securities and Exchange
Commission 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
reports.
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
matters.
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