How’s your Thursday morning going Sons and Daughters of Deloitte? Busy? Swamped, you say? Thought so. Well, whatever it is, it can wait.
YES. IT. CAN.
Barry Salzberg needs your full and undivided attention to an important matter today: compliance with internal policies, specifically independence and ethics. During the throes of busy season, you adherence to these important values must not waiver.
Are you trading in client stock in your Scottrade account? Ghost-ticking workpapers? Ramming meaningless numbers into that tax return? Stop it right now. Bar knows that sometimes you can’t just help yourselves, so he dropped a little reminder into your inbox this morning (we were told) with the subject “A must-read for everyone”.
Today, we have an important challenge that we simply cannot ignore. Our level of compliance with our internal policies – specifically our independence and time reporting policies – is not where we need it to be.
Please take a few minutes to read Beyond the Numbers: Our Independence, Ethics & Compliance Imperative from Mike Zychinski, our Chief Ethics and Compliance Officer. The report, which I consider to be a must-read for everyone, addresses concerns from our regulators, what we are doing as an organization to address them, and what you can do to meet your individual compliance requirements.
When it comes to issues of compliance, we must meet the expectations of our clients and regulators. What’s more, we must fulfill our own high expectations of ourselves. Thank you for taking a few minutes to read the report and for your focus on meeting your individual compliance requirements.
Regards,
Barry Salzberg
CEO
Deloitte LLP
Bolding is ours. After this email, a 2,100 (give or take) word report follows from Chieftain of Ethics Mike Zychinski. Despite the high standard that Deloitte holds you to — higher than the SEC, PCAOB, and the AICPA, we might add — this happend, “Based on our own reviews and that of the PCAOB, we believe compliance with our independence policies is not what it should be, and the PCAOB has, in fact, questioned our commitment to adhere to our own policies. This is clearly not acceptable.”
Our contributor Francine McKenna reminded us that Deloitte didn’t think too much of the PCAOB’s report from last year, “They [are] the same firm that famously responded to the PCAOB’s latest inspection report, ‘How dare you second guess us?‘”
Based on the following list of reprimands, perhaps the PCAOB has a leg to stand on?
Four hundred seventy-five total reprimands were issued for noncompliance issues, including:
31 reprimands for independence-related violations of SEC or AICPA rules
174 reprimands for noncompliance with Deloitte independence policy
218 reprimands for failure to meet mandatory training requirements
45 reprimands for CPE noncompliance
7 reprimands for noncompliance with Deloitte CPA Licensing policy
Is 475 a lot or a little? An improvement from last year or is it worse? We’re not really sure. We haven’t received any comment from Deloitte and their Transparency Report doesn’t have more details. But since Barry Salzberg never seems to be satisified with anything, we’re guessing you can do better.
Yeah, independence compliance is not quite up to snuff, I suppose. That's how Vice Chairman Tom Flanagan broke those rules 300 + times over the last few years. Interesting that Deloitte is already responding to regulators concern in this regard when those concerns have not yet been made public by PCAOB, SEC.
When did it become unacceptable? Before or after Flanagan broke the rules? By labeling it unacceptable and appointing someone to be in charge of such unacceptable compliance, does it somehow take Barry off the hook – in the traditional, blame someone else, sense? This firm has plenty of people who are in scape goat positions. Worse case scenario would be to pin the blame on a few poor individuals (not Flanagan of course) and allow the leadership to escape blame. Just get rid of the scape goats (maybe pay them some money) and hire some new (naive) scape goats to take the blame the next time this happens. The people at the top always manage to escape blame.
It is interesting how Barry used the words “not where we need it to be” (typical Deloitte fuzzy language ) and Mike actually uses the word “unacceptable.” So if someone tells you that your utilization, revenue, other metrics are “not where we need it to be,” does it mean that the firm will work with you to get to where it needs to be? I personally think it means “unacceptable,” and its time to look for a new job. If you don't, take the hint, someone will say to you later, “remember when we had that talk? I warned you, didn't I?”