Deloitte Colombia, an affiliate of the Big Four audit firm Deloitte, has reached a settlement with the Public Company Accounting Oversight Board (PCAOB) involving a payment of $900,000. The settlement pertains to alleged lapses in quality control during the 2016 audit of a bank, Bancolombia.
The PCAOB disclosed that Deloitte Colombia's quality control system failed to provide reasonable assurance that its audit work complied with PCAOB standards and ensured the independence of its personnel. This oversight was identified during the audit of Bancolombia in 2016.
The PCAOB order outlined specific issues related to the 2016 audit. It noted that the lead partner and the engagement team failed to appropriately document necessary procedures and made alterations to documentation after the audit report had been issued. Additionally, Deloitte Colombia's monitoring procedures were deemed inadequate in identifying the failure of the lead partner and the engagement team to perform and document their audit work in a timely manner.
Furthermore, Deloitte Colombia was criticized for not removing individuals with financial conflicts, such as those holding mortgage loans or brokerage accounts with the bank, from the engagement.
Robert Rice, Director of the PCAOB's Division of Enforcement and Investigations, emphasized the importance of firms establishing and implementing effective quality control systems to ensure compliance with auditing and independence requirements.
As part of the settlement, Deloitte Colombia has agreed to revise its quality control policies and procedures to provide reasonable assurance that its personnel will adhere to PCAOB standards and maintain independence when required. Additionally, staff at the firm will undergo 20 hours of training on U.S. requirements.
Deloitte has not yet commented on the settlement, and it's worth noting that Deloitte Colombia neither admitted nor denied the PCAOB's findings.
This settlement underscores the regulatory scrutiny faced by auditing firms and the importance of maintaining rigorous quality control measures in the auditing process.
By fLEXI tEAM