Botched Audit

New York, NY: (Dec-10-07) The Public Company Accounting Oversight Board brought charges against Deloitte & Touche, one of the Big Four accounting firms, alleging that the firm botched an audit of a pharmaceutical company by entrusting it to a partner it knew to be a poor auditor. The suit stated that by the time Deloitte issued its 2003 audit of Ligand Pharmaceuticals, a San Diego company, the firm's management had concluded that the San Diego audit partner, James L. Fazio, 46, had performed poor audits in the past and should not be assigned to future audits of public companies. Board officials claimed that Fazio was allowed to supervise the Ligand audit without additional oversight and failed to conduct proper audit procedures that would have shown that the company was overstating its revenue. As part of a settlement reached, Deloitte agreed to pay the board $1 million to resolve allegations. Under the Sarbanes-Oxley Act of 2002, which created the board, the money is to be used for accounting scholarships. Deloitte consented to the payout without admitting or denying the board's findings. Company officials stated that the settlement was reached to avoid the costs and risks of litigation.

[NY TIMES] Deloitte Agrees to Pay $1 Million Fine

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Published on Dec-12-07