We need to talk about Deloitte
We need to talk about Deloitte. The Big Four accounting firm has popped up in yet another financial scandal. This time its consultants allegedly abetted Standard Chartered’s financial transactions with Iran. Added to reports of shoddy work elsewhere, including its involvement in HSBC’s money laundering mishap, it’s hard to avoid the impression that something’s not right at Deloitte.
Standard Chartered brought Deloitte in as an independent party back in 2005 to reassure regulators that its anti-money laundering policies and procedures were up to snuff. The New York State Department of Financial Services, in a claim this week which threatens the bank’s Wall Street business, alleged that Deloitte consultants intentionally watered down their report to help the bank obscure transactions involving Iranian clients.
Deloitte denies any knowledge of any such misdeeds. And to be fair, the alleged fudging took place nearly seven years ago. But this is not an isolated incident for Deloitte. In a July article, Reuters reported that Deloitte staff charged with overseeing HSBC’s anti-money laundering compliance presided over a process that discouraged investigators from digging into suspicious transactions.
And the negative press doesn’t stop at its U.S. consulting arm. As an auditor, Deloitte checked the books of Diamond Foods, a snack-food company that botched its accounting to the tune of $80 million in 2010 and 2011. More damning, the Public Company Accounting Oversight Board, the audit industry’s watchdog, publicly shamed Deloitte last year for its failure to tighten up internal controls promptly. That, in turn, put its work for the U.S. federal government under the hot lamp.
Mistakes are unavoidable in a business that counts more than 180,000 employees and nearly $30 billion of revenue. But fact-checking consultants and auditors need to be above reproach, especially as there are only four major firms left to handle the books of big multinational firms. Deloitte’s seemingly disproportionate share of screw-ups suggests the firm needs to redouble efforts to ensure its corporate culture values standards over profits.