A Colombian affiliate of Big Four audit firm Deloitte agreed to pay $900,000 as part of a settlement with the Public Company Accounting Oversight Board (PCAOB) addressing alleged quality control lapses that occurred during the 2016 audit of a bank.
Deloitte Colombia’s quality control system failed to provide it with reasonable assurance for its audit work’s compliance with PCAOB standards and the independence of its personnel, the regulator said in a press release Wednesday.
The details: Regarding Deloitte Colombia’s 2016 audit at Bancolombia, the lead partner and engagement team did not appropriately document necessary procedures and altered documentation after the audit report was issued, according to the PCAOB’s order.
The firm’s monitoring procedures were not sufficient to “identify the failure of the lead partner and the engagement team to timely perform and appropriately document their audit work,” the PCAOB said.
Deloitte Colombia was further faulted for not removing individuals with financial conflicts, including mortgage loans or brokerage accounts with the bank, from the engagement.
“Firms must establish and implement effective systems of quality control to support compliance with all relevant auditing and independence requirements,” said Robert Rice, director of the PCAOB’s Division of Enforcement and Investigations, in the release.
In settling, Deloitte Colombia consented to revise its quality control policies and procedures to give it reasonable assurance its personnel will comply with PCAOB standards and maintain independence in all required circumstances. Staff at the firm will also be subject to 20 hours of training on U.S. requirements.
A representative for Deloitte did not respond to a request for comment. Deloitte Colombia neither admitted nor denied the PCAOB’s findings.