July 22, 2018

Deloitte’s Dutch Firm Takes Its Turn With PCAOB

The PCAOB has announced another settlement with a Deloitte firm today, this time the Dutch version. This relates to an independence snafu that happened back in May of 2012 when the new CEO, Piet Hein Meeter, resigned abruptly, after serving in that role for just a few months. Here's Michael Rapoport's report in the Wall Street Journal:

Deloitte Accountants BV, the international accounting network’s member firm in the Netherlands, violated independence rules because the wife of the firm’s then-Chief Executive Piet Hein Meeter was on the board of a family trust that included investments in RBS Holdings NV and Reed Elsevier NV when Deloitte was their auditor in 2011-2012.

The Deloitte firm didn’t review Mr. Meeter’s financial interests for independence concerns before he became CEO, and the firm’s quality control system wasn’t adequate to insure its independence, the PCAOB said.

Stupid, right? You know what else is stupid? An organization in complete denial about its indifference to the rules. Francine McKenna's MarketWatch article from last week outlined the regulatory actions against Deloitte that go back for over a decade. And yet a spokesperson said this:

A Deloitte Netherlands spokeswoman said the PCAOB’s findings “related to facts dating from 2012 and before,” and since then the Deloitte Netherlands affiliate “has made substantial improvements to its quality control system in order to provide assurance that the firm is meeting all required independence standards.”

This "independent firm part of a global network" sure does come in handy when these things arise, doesn't it? When bad stuff happens, each firm can plausibly claim that all's better now and that stuff that happens in Brazil or Mexico or Pittsburgh or San Francisco or…San Francisco or wherever is part of an unrelated entity.

Do us all a favor, Deloitte, and get out of the audit business. The charade is getting embarrassing.

[WSJ, PCAOB Order]

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[Motley Fool]