A partner at Deloitte & Touche LLP became the first individual fined by the U.S. board that oversees corporate auditors, for mishandling a 2003 review of a unit at Navistar International Corp. (NAV:US)
Christopher Anderson, a partner in Deloitte's Chicago office, was suspended by the Public Company Accounting Oversight Board for a year and fined $25,000 because he ``violated PCAOB standards'' by agreeing ``without a reasonable basis'' to accounting decisions by Navistar Financial Corp., the board said in a disciplinary order today. The misconduct was related to $19.7 million in ``apparent errors'' that overstated assets, revenues and earnings, the Washington-based agency said.
``When a client faces financial reporting pressures, auditors must be vigilant in upholding their professional responsibilities,'' Claudius Modesti, the PCAOB's enforcement and investigations director, said in an e-mail. Anderson, 46, agreed to settle without admitting or denying wrongdoing.
The accounting board was set up in 2002 under the Sarbanes-Oxley law, which strengthened regulation of businesses after frauds at Enron Corp. and WorldCom Inc. Accounting firms play a key role in financial markets because U.S. securities laws require publicly traded companies to report audited financial results.
``We're pleased that Mr. Anderson and the PCAOB were able to resolve the matter,'' Deborah Harrington, a spokeswoman for New York-based Deloitte, said in an interview. Eliot Lauer, a New York lawyer for Anderson, didn't respond to phone calls.
Roy Wiley, a spokesman for Warrenville, Illinois-based Navistar International, said the company doesn't comment on ``regulatory or legal actions.'' Navistar Financial is part of Navistar International, the world's fourth-largest truck maker.
Investor advocates such as Damon Silvers, associate general counsel at the AFL-CIO labor federation, say the PCAOB hasn't been aggressive in fighting auditor fraud. The board's only fine for a large firm was $1 million against Deloitte in December for mishandling a 2003 audit of Ligand Pharmaceuticals Inc. (LGND:US)
A federal appeals court voted 2-1 in August to uphold the PCAOB's legality after a Nevada accounting firm argued that the board's makeup violated the Constitution's separation of powers clause. In September, the firm, Beckstead and Watts LLP, asked the full U.S. Appeals Court for the District of Columbia Circuit to reconsider the ruling.
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