Institute of Chartered Accountants of Ontario sends a message

Canadian Business: Professional misconduct
The Institute of Chartered Accountants of Ontario quietly dropped a bombshell earlier this month. Buried deep on the website of the professional body is a scathing report finding three senior Deloitte & Touche LLP auditors—including the accounting firm’s former chairman—guilty of professional misconduct in connection with Livent Inc.’s financial statements.
According to the 72-page ruling from the ICAO Discipline Committee, the auditors failed to follow up on accounting red flags, did not follow their own auditing procedures and continued to rely too heavily on the honesty of
Livent’s managers—despite repeated instances where executives allegedly lied to them. “The auditors said that their skepticism was ‘sky high,’” reads the ruling. “However, with respect to the impugned conduct, the evidence disclosed that the auditors failed to exercise the professional skepticism required.”

While it is remarkable for a governing body of Chartered Accountants to censure members of their profession in such bold terms, it remains to be seen what if any impact this will have on auditors in the future.

I will be interested to see what fraud-watchers like the gruff Al Rosen and the loquacious Sam E Antar have to say on this subject.

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