The Man From FCPA has seen some egregious cases of bribery and corruption across the globe. Yet even the enforcement action announced this week involving the Big Four accounting firm Deloitte and its Brazilian arm seems far beyond the pale. It certainly begs the question of who watches the watchers. Fortunately in the United States, when it comes to public accounting, it is the Public Company Accounting Oversight Board.

As reported in the Wall Street Journal, the company was fined a record $8 million for falsifying audit reports, altering documents, and then providing false testimony under oath to the regulatory oversight board. The PCAOB sanctioned 12 former partners in the firm. In a statement by Claudius Modesti, director of enforcement at the PCAOB, said, “This is the most serious misconduct we’ve uncovered. It's cover-up after cover-up after cover-up.” Separately, the PCAOB fined Deloitte’s Mexico affiliate $750,000 to settle allegations it had not taken proper steps in documenting its audits.

The issue began with a PCAOB review of Deloitte’s audit of its Brazilian client, the company Gol Linhas Aéreas Inteligentes, (Gol) a regional airline. The Deloitte engagement partner ordered to alter Gol work papers to provide to the agency and then falsely testify under oath as to the veracity of the work papers. One of the terminated senior managers was caught on tape instructing an underling, “Everything you told me, everything we discussed, never happened.”

This intentional conduct was about as bad as it gets. If the gatekeepers cannot be trusted the self-regulatory schemes of U.S. Securities laws from the 1934 Act coming forward through SOX and Dodd-Frank are seriously called into question. For the greater anti-corruption world, this case is also problematic. If an auditor is willing to lie to the government and alter work papers on behalf of a client, what might it be willing to do to hide bribery and corruption?

So who watches the watchers?