The US audit watchdog has also announced sanctions against 12 former partners and other audit personnel at Deloitte Touche Tohmatsu Auditores Independentes for violations including non-cooperation with a PCAOB inspection and subsequent investigation. A former engagement partner also was charged with causing the firm to issue materially false audit reports.

Deloitte Brazil admitted that it violated quality control standards and failed to cooperate with a PCAOB inspection and investigation, the first such admissions the PCAOB has obtained from a global network firm.

The PCAOB found that Deloitte Brazil knowingly issued materially false audit reports for the 2010 financial statements and internal control over financial reporting of its client, a Brazilian airline called Gol Intelligent Airlines.

In advance of a 2012 PCAOB inspection, a Deloitte Brazil engagement partner, who also served as the firm's audit practice leader, directed junior personnel to alter work papers from the 2010 audit to conceal known audit deficiencies, which related to assessment of material risks around future ticket sales, amongst other issues. The firm presented the improperly altered work papers, as well as other misleading documents and information, to PCAOB inspectors.

After the PCAOB began an investigation of the audit, Deloitte Brazil took additional steps to conceal its audit deficiencies and work paper alterations, with the knowledge and participation of senior firm leaders. Multiple firm partners provided false testimony under oath and made false representations to PCAOB staff about the 2010 audit in an attempt to obstruct the PCAOB investigation.

In addition to the $8m penalty, the PCAOB’s largest ever, Deloitte Brazil agreed to sanctions including undertakings to improve the firm's system of quality control; the appointment of an independent monitor to review and assess the firm's progress toward achieving remedial benchmarks; immediate practice limitations, including a prohibition on accepting certain new audit work until the monitor confirms the firm's progress in achieving its remedial benchmarks; and additional professional education and training for the firm's audit staff.

Claudius Modesti, director of the PCAOB division of enforcement and investigations, said: ‘The firm leaders who participated in the misconduct not only set a tone of disregard for compliance with PCAOB rules, standards, and oversight, but also actively subverted that oversight.’

The 12 former Deloitte Brazil partners and other audit personnel sanctioned in the case included partners who held the senior leadership positions of risk and reputation leader, national professional practice director, and audit practice leader, in addition to six other partners and three other audit personnel. All but one were barred or suspended from associating with a registered public accounting firm.

The PCAOB granted significant credit for extraordinary cooperation to one individual — a senior manager on the audit — after he reported to PCAOB staff that senior firm management was obstructing their investigation. The board also granted credit to two other individuals for providing substantial assistance to the investigation.

Deloitte Brazil said in a statement that 'unethical behavior is not tolerated in our firm', and that the conduct of the individuals involved was 'wholly incompatible with our culture.' The  individuals involved left the firm as soon as the problems were uncovered. New leadership took effect in June, which has 'worked aggressively to uphold the highest standards of professionalism.'

The PCAOB enforcement decision for Deloitte is here

Details of the PCAOB Deloitte sanctions on the 12 individuals are here