10/21/2011 03:15:00 PM EST
A Potentially Costly Combination: Deloitte, Taylor Bean and the PCAOB
you follow news affecting auditors, you may have noticed that the PCAOB made a
very rare disclosure yesterday about one of the big four firms,
Deloitte. The PCAOB said that Deloitte was previously sanctioned for not
being skeptical enough to challenge statements made by management and that they
still have problems with this.
Normally, the PCAOB tells the big audit firms what they did wrong and gives
them a year to fix it with the threat that they will disclose their failures
after a year if the firm doesn't fix it. Well, they decided Deloitte was still
dropping this ball so they disclosed it publicly. Importantly, the timing of
this ball dropping may have been very detrimental to Deloitte. Here is why...
blogged about Deloitte being sued for over $7 billion for it's audits of Taylor
Bean, a firm that was heavily involved in the mortgage meltdown. The
lawsuit claims that Deloitte was both negligent and turned a willful blind eye.
Unfortunately for Deloitte, this recent PCAOB disclosure seems to provide some
fuel to ignite that claim.
Read the article in its entirety on Mark and Aaron
Zimbelman's blog, FraudBytes
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