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Briglia Hundley Blog

Deloitte Canada fined $350,000 for independence problems

On October 16, 2018, the PCAOB announced a $350,000 fine against Deloitte Canada for independence violations due to technical reports issued by a South African mine-consulting company, Venmyn Deloitte (Pty) Ltd., which was actually an affiliate of Deloitte Canada. Deloitte Canada audited its own work during the 2012 audit of Banro by relying on Venmyn Deloitte’s valuation of Banro’s mining assets. Also, in both its 2013 and 2014 technical mining reports, as well as in company press releases, Venmyn Deloitte publicly acknowledged responsibility for certain Banro gold resource and reserve estimates. That impaired Deloitte Canada’s independence because both Deloitte Canada and Banro basically had a mutual interest in making sure that Banro’s estimates proved to be correct. Independence issues continue to be a focus of both the PCAOB and SEC, and independence is one of the announced four higher priority areas for PCAOB enforcement. (See, e.g., November 14, 2014 speech by Steven B. Harris to PLI’s 12th Annual Director’s Institute on Corporate Governance).

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