PCAOB sanctions ex-Deloitte Turkey CEOs

The US Public Company Accounting Oversight Board (PCAOB) has issued sanctions against two former senior partners and ex-CEOs of Deloitte Turkey for failure to stop documents being altered ahead of one of the regulator’s inspections

The PCAOB found that Huseyin Gurer and Gokhan Alpman, who both served as CEOs at the firm, known officially as DRT Bagimsiz Denetim ve Serbest Muhasebeci Mali Musavirlik, were aware efforts to improperly alter documents in advance of a 2014 PCAOB inspection and took no action.

The document alterations ultimately led to charges against Deloitte Turkey and two others of its former personnel.

The PCAOB has also barred a third senior partner,  Omer Tanriover, the former risk and reputation leader, for failing to cooperate with a PCAOB investigation of the matter.

William Duhnke, PCAOB chairman, said: ‘Audit firms and their personnel have a fundamental duty to act with integrity. That integrity begins with their senior leaders and the tone they set for the audit practices they oversee.

‘When firm leadership fails in its responsibilities, the board will take appropriate action to hold that leadership accountable,’

All three former employees have been barred from associating with a PCAOB-registered accounting firm, and Gürer was fined $25,000. Gürer and Alpman may apply to have their bars lifted after three and two years, respectively. Tanriöver's bar is permanent as he refused to provide information in response to demands from PCAOB investigators.

Claudius Modesti, director of PCAOB enforcement and investigations, said: ‘The orders announced today make clear that, far from setting an appropriate tone at the top, Deloitte Turkey's former CEOs directly and substantially contributed to the firm's ethical lapses and are facing the serious consequences of that behaviour.

‘In addition, the imposition of the severest of sanctions on the firm's former risk and reputation leader demonstrates the importance of cooperating with PCAOB investigations.’

In December 2017 Deloitte Turkey paid a $750,000 civil money penalty to settle charges that it devised and implemented a plan to improperly alter documents in advance of the 2014 PCAOB inspection. This involved downloading archived documentation onto laptops that were disconnected from the firm's network, and making these laptops available to three audit teams whose engagements had been selected for review.

An audit partner on one engagement changed the date and time settings on the laptop and altered numerous documents, which were then provided to PCAOB inspectors.

In 2016 Deloitte Turkey reported the misconduct to the PCAOB, offered what the regulator described as ‘substantial assistance’ to its inquiry and conducted an internal investigation.

In a statement the firm said:  ‘Deloitte Turkey self-reported this matter to the PCAOB, fully cooperated with the PCAOB’s investigation, and is pleased that it is now concluded.

‘The conduct of these three individuals was wholly incompatible with our culture, and they are no longer with the firm. We remain focused on adherence to the highest standards of professionalism in the work we do for our clients, and ensuring full confidence in the quality of our audits.’

Report by Pat Sweet

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