Global Cases
Around the world regulators are taking a firmer stance against audit firms when there is an audit failure. Disciplinary fines are increasing across the globe, and high profile cases attract significant press attention.
During this process the IRBA has monitored high profile cases around the world in order to ensure that the IRBA’s disciplinary process is aligned to international benchmarks. It became clear that the IRBA penalties were too lenient in comparison to those of international regulators, specifically as it related to the amounts of fines and whether or not publishing details of findings in cases would be in general or specific terms.
The IRBA is currently limited in this regard by the Auditing Profession Act 26 of 2005 which in Section 51(3)(ii) states that the IRBA may “impose on the registered auditor a fine not exceeding the amount calculated according to the ratio for five year’s imprisonment prescribed in terms of the Adjustment of Fines Act 101 of 1991.
While Section 51(5) says that the “Regulatory Board may, if it deems appropriate, publish the finding and sanction imposed in terms of subsection (3)” in practice the disciplinary has handed down sanctions which usually provide for publication of findings and penalties only in general terms.
International fines and links to the articles
| Client | Country | Audit Firm | Fine / Sanction | Date | Failure | Link to Article |
|---|---|---|---|---|---|---|
| Various | Netherlands | KPMG | €900 000 | 03-Jun-13 | Audit Quality | Article |
| Standard Chartered | USA | Deloitte | m | 19-Jun-13 | Auditor Independence on consulting work | Article |
| Standard Chartered | USA | Deloitte | Regulatory Reform | 19-Jun-13 | Auditor Indedendence; misconduct | Article |
| Partner Anderson / Navistar Financia | USA | Deloitte | $ 2m | 23-Oct-13 | Audit quality; Violation of bar | Article |
| Farepak | UK | EY | €1m | 19-Dec-13 | Collapse; Audit Quality | Article |
| Various | USA | KPMG | $ 8.2m | 24-Jan-14 | Auditor Independence | Article |
| Livent | Canada | Deloitte | Can $ 84.8m | 06-Apr-14 | Fraud; Audit Qualify; Lawsuit damagers | Article |
| Undisclosed clients | USA | EY | $ 4m | 15-Jul-14 | Auditor Independence; Improper lobbying | Article |
| Bank of Tokyo-Misubishi | USA | PwC | $ 25m | 18-Aug-14 | Auditor Independence | Article |
| Sino-Forest Corp | Canada | EY | Can $ 8m | 30-Sep-14 | Auditor Independence; Insufficient Scepticism | Article |
| Corporate Commercial Bank | Bulgaria | KPMG | $ 120.600 | 09-Jan-15 | Collapse; Audit Quality; Auditor Independence | Article |
| Partner Marsh | UK | KPMG | £39.000 | 03-Feb-15 | Ethics | Article |
| Cable and Wireless | UK | KPMG | £390.000 | 04-Feb-15 | Auditor Independence | Article |
| Pendragon | UK | KPMG | £250.000 | 04-Feb-15 | Auditor Independence | Article |
| Various | China | Deloitte | $ 500.000 | 09-Feb-15 | Non-Compliance | Article |
| Various | China | EY | $ 500.000 | 09-Feb-15 | Non-Compliance | Article |
| Various | China | KPMG | $ 500.000 | 09-Feb-15 | Non-Compliance | Article |
| Various | China | PwC | $ 500.000 | 09-Feb-15 | Non-Compliance | Article |
| MG Rover | UK | Deloitte | £3m (cut from £14m) | 13-Apr-15 | Collapse; Fraud; Auditor Independence | Article |
| Lehman Bros | USA | EY | $ 10m (+ civil claim $ 99m) | 17-Apr-15 | Collapse; Fraud; Auditor Independence | Article |
| Hellas Telecommunications | Greece (UK) | EY | £250.000 | 16-Jun-15 | Collapse; Conflict of Interest; Auditor Independence | Article |
| Various | USA | Deloitte | $ 1.1m | 02-Jul-15 | Auditor Independence | Article |
| Lapple Ireland | Ireland | Deloitte | €41.000 | 13-Sep-15 | Audit Quality | Article |
| FIFA | Switzerland | KPMG | Internal Review | 24-Sep-15 | Fraud; Audit Quality | Article |
| Bloxham Stockbrokers | Ireland | Deloitte | Under Investigation | 17-Oct-15 | Collapse; Audit Quality | Article |
| Toshiba | Japan | EY | $ 17.4m | 22-Dec-15 | Audit Quality | Article |
| Obrascón Huarte Laín | Mexico | Deloitte | $ 233.000 | 19-Feb-16 | Audit Quality | Article |
| Presbyterian Mutual Society | Ireland | Moore Stephens | £200.000 | 01-Mar-16 | Audit Quality | Article |
| Undisclosed | Netherlands | Deloitte | €1.8m | 24-Mar-16 | Audit Quality | Article |
| Undisclosed | Netherlands | EY | €2.2m | 24-Mar-16 | udit Quality | Article |
| Undisclosed | Netherlands | KPMG | €1.2m | 24-Mar-16 | Audit Quality | Article |
| Undisclosed | Netherlands | PwC | €845.000 | 24-Mar-16 | Audit Quality | Article |
| Various Inspections Failures | Netherlands | KPMG | €1.24m | 24-Mar-16 | Audit Quality | Article |
| Serco | UK | Deloitte | Under Investigation | 08-Jun-16 | Fraud; Audit Quality | Article |
| Ted Baker | UK | KPMG | Under Investigation | 10-Jun-16 | Ethics; Auditor Independence | Article |
| BHS | UK | PwC | Under Investigation | 27-Jun-16 | Collapse; Audit Quality | Article |
| Burril Life Science Capital Fund | USA | PwC | Under Investigation | 18-Jul-16 | Fraud; Embezzlement; False Audit Reports; Auditor Independence | Article |
| Colonial Bank | USA | PwC | $ 5.5bn | 11-Aug-16 | Collapse; Fraud; Audit Quality | Article |
| Lebanese Canadian Bank | Dubai | Deloitte | Civil Claim Suit | 23-Aug-16 | Fraud; Audit Quality; Auditor Independence | Article |
| Cattles | UK | PwC | £2.3m (cut from £3.5m) | 31-Aug-16 | Near Collapse; Audit Quality | Article |
| Monsanto | USA | Deloitte | Referred by whistleblower | 01-Sep-16 | Audit Quality; Auditor Independence | Article |
| New Century Group Hong Kong Ltd | Hong Kong | EY | HK $ 30.000 | 12-Sep-16 | Audit Quality; Auditor Independence | Article |
| Partners Bednar, Hartford and Kamienski et al | USA | EY | $ 9.3m | 19-Sep-16 | Auditor Independence | Article |
| Weatherford International | USA | EY | $ 11.8m | 19-Oct-16 | Fraud; Audit Quality | Article |
| Ramapo Municipality | USA | PKF O Connor Davies | $ 480.000 | 01-Nov-16 | Fraud; Auditor Independence | Article |
| Aero Inventory | UK | Deloitte | £4m | 10-Nov-16 | Collapse; Audit Quality; Misconduct | Article |
| Gol Linhas Aéreas Inteligentes | Brazil | Deloitte | $ 8m | 05-Dec-16 | False reporting; Cover-up; Serious Misconduct | Article |
| Southern Copper | Mexico | Deloitte | $ 750.000 | 09-Dec-16 | Poor documentation | Article |
| RBS Holdings/Reeed Elsevier | Netherlands | Deloitte | $ 300.000 | 14-Dec-16 | Auditor Independence | Article |
| RSM Tenon | UK | PwC | Under Investigation | 14-Dec-16 | Collapse; Failure to Act with Professional Competence and Due Care | Article |
| Undisclosed | Indonesia | EY | $ 1m | 09-Feb-17 | Audit Quality; Audit Failure; Non-Cooperation | Article |
| Redcentric | UK | PwC | 27-Feb-17 | Under Investigation | Article | |
| Lam Research Corporation | USA | EY | $ 87.000 | 14-Mar-17 | Insider Trading | Article |
| Sara Lee | Brazil | PwC | $ 10.000 | 22-Mar-17 | Audit Failure | Article |
| MF Global | USA | PwC | $ 2bn | 23-Mar-17 | Collapse; Audit Quality; Accounting | Article |
| Daewoo Shipbuilding and Marine Engineering | South Korea | Deloitte Anjin | 12 Month Suspension | 27-Mar-17 | Accounting Fraud | Article |
| Huishan | China | KPMG | Possible Investigation | 11-Apr-17 | Business Collapse; Fraud | Article |
| Agrokor | Croatia | Audit Firm Unknown | Under Investigation | 12-Apr-17 | Suspected Accounting Fraud; Potential Business Collapse | Article |
| Asset Co | UK | Grant Thornton | £2.3m | 24-Apr-17 | Lack of Professional Scpticism; Poor Audit Quality | Article |
| Wells Fargo | USA | KPMG | Possible Investigation | 02-May-17 | Unreported Fraud; PCAOB under pressure to Investigate | Article |
| Rolls Royce | UK | KPMG | Investigation Launched | 04-May-17 | Bribery; Corruption | Article |
| Property Ventures | New Zealand | PwC | NZ $ 4m in Damages | 10-May-17 | Collapse; Audit Quality; Misconduct; Collusion to avoid Insolvency | Article |
| Connaught | UK | PwC | £5m | 11-May-17 | Collapse; Lack of Scepticism; Audit Quality | Article |
| 2Go | Philippines | KPMG | Investigation | 11-Jul-17 | Accounting Failure | Article |
| Satyam | India | PwC | Investigation | 18-Jul-17 | Fraud | Article |
| Merril Lynch | USA | PwC | $ 1m | 03-Aug-17 | Audit Failure | Article |
| Bank Various | Ukraine | PwC | Revoked Audit Licence for Banks | 24-Jul-17 | Audit Failure | Article |
| Unnamed | Denmark | Deloitte | Two failed PCAOB Inspections | 02-Aug-17 | Failed Inspections; Audit Quality | Article |
| Unnamed | Hong Kong | Crowe Horwarth | PCAOB 3-year ban | 26-Jul-17 | Non-Cooperation with an Investigation | Article |
| Miller Energy Resources | USA | KPMG | $ 6.2m | 15-Aug-17 | Adit Quality; Overstated Value | Article |
| RSM Tenon | UK | PwC | £5.1m | 16-Aug-17 | Audit Quality; Audit Failure | Article |
| Mitie | UK | Deloitte | Probe Started | 30-Aug-17 | Article | |
| Tech Data Limited | UK | EY | £1.8m | 17-Oct-17 | Professional Scepticism; Audit Quality | Article |
High profile cases per country
