The US Securities and Exchange Commission (SEC) announced last week that Deloitte Tohmatsu (Deloitte Japan) had agreed to pay a $2 million fine to settle charges that it had violated auditor independence rules.
The SEC explained in a statement that almost ninety Deloitte employees had maintained substantial bank accounts with a client’s subsidiary. “Under the SEC’s rules, accountants are not considered to be independent if they maintain bank accounts with an audit client with balances greater than FDIC or similar depositary insurance limits,” the statement noted.
“The SEC’s order also found that Deloitte Japan’s system of quality controls did not provide reasonable assurances that the firm and its auditors were independent from audit clients,” the statement added.
Sanctions were also taken against two individual officers of Deloitte Japan who had direct responsibility for ensuring compliance to such regulations.
In the context of IR development in Japan, Deloitte has picked up contracts at various times to serve in an advisory capacity to the Tokyo, Yokohama, Osaka, Nagasaki, and Wakayama municipal governments.