A Potentially Costly Combination: Deloitte, Taylor Bean and the PCAOB

If 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...

Recently, we 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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