Do you guys remember the Deloitte auditors in Canada who were busted changing the clocks on their computers to backdate workpapers? The reason they took the extraordinary step of changing the clocks on their computers is due to a software feature Deloitte added to their audit suite explicitly intended to prevent the backdating of workpapers. The feature was explained ad nauseam to partners and staff alike after its implementation to make sure everyone understood that backdating workpapers is a major no-no. Everyone knew this of course, especially after they got instructed by the firm how to use the new software feature that prevented them from doing it.
Prior to the Engagement Management System (EMS) update in November 2016, Deloitte auditors were permitted to manually enter sign-off dates for both audit work and reviews. After the update, now hindered by a software limitation, some auditors got creative and changed the date on their computers to do effectively the same thing for over 930 audit working papers in at least 39 audit engagements. Eventually they got caught when Deloitte ratted themselves out to regulators at CPA Ontario in 2019, leading to a $1.59 million ($1.2 million USD) fine. And some mild embarrassment.
Before bringing the matter to CPA Ontario, Deloitte implemented a software update that prevented anyone from changing the date and time on their computers. After March 2, 2018, anyone trying to do so would get a pop-up that says “you do not have permission to perform this task. Please contact
your computer administrator for help.”
Bringing things back to current day, The Globe and Mail had an update last week on the five partners involved in this backdating saga now that their CPA Ontario hearings are over. G&M specifically called out the fact that CPA Ontario included information on the partners’ performance ratings in each of their orders which is hilarious. Let’s take a look, shall we? We’ll include how many workpapers each partner personally backdated so we can keep score.
Nancy Ewings, with Deloitte since 1995, was the deputy leader of its private audit practice for Ontario at the time and remains a partner today.
The regulator says Deloitte lowered her quality rating for the 2019 fiscal year – a performance metric used in part to determine incentive pay – to “Meets Expectations” from “Exceeds Expectations,” resulting in a reduction of $56,000.
Workpapers backdated: Unknown. According to CPA Ontario, Ms. Ewings could not recall which working papers or engagements were impacted and Deloitte did not provide CPA Ontario with information sufficient to specifically identify the impacted working papers and audits. She served as lead engagement partner on 80 audits during the time period in question.
Still at Deloitte: Yes.
CPA Ontario settlement agreement [PDF]
Steven Lawrenson, with Deloitte since 1991, leads its Southwestern Ontario public-company audit practice.
CPA Ontario says Deloitte lowered his quality rating for the 2018 fiscal year to “Improvement Required” from “Meets Expectations,” resulting in a pay reduction of $65,750.
Workpapers backdated: 241
Still at Deloitte: Yes.
CPA Ontario settlement agreement [PDF]
Stacy Levac, with Deloitte since 2016, worked in audit in the Ottawa office exclusively for privately owned companies.
Deloitte lowered his quality rating for the 2019 fiscal year to “Improvement Required” from “Meets Expectations,” eliminated his incentive compensation and reduced a discretionary bonus by $10,000.
Workpapers backdated: 199
Still at Deloitte: No.
Ratan Ralliaram, with Deloitte since 1993, was the team leader for the GTA audit financial services group from 2017 to 2019.
CPA Ontario says Deloitte lowered his quality rating for the 2018 fiscal year to “Improvement Required” from “Meets Expectations,” resulting in a pay reduction of $52,600.
CPA Ontario settlement agreement [PDF]
Workpapers backdated: 268+3. He told two auditors underneath him to backdate three workpapers on top of the 268 he backdated personally.
Still at Deloitte: Yes.
Mervyn Ramos, with Deloitte since 2002, had been a lead engagement and EQCR partner and worked for clients in the financial services industry.
CPA Ontario says Deloitte lowered his quality rating for the 2018 fiscal year to “Meets Most Expectations” from “Meets Expectations.”
Workpapers backdated: 41
Still at Deloitte: No.
CPA Ontario settlement agreement [PDF]
Earlier: Deloitte Auditors Got Caught Changing Their Computer Clocks to Backdate Workpapers
Commit what amounts to fraud and get a little fine less than a first year associate’s salary. Yeah, seems legit. No wonder no one respects auditors. You can’t be a reputable profession if bad actors don’t get more seriously punished.
This is Canada – they are not strong as Deloitte in the US. Deloitte Canada struggles to survive and quality work is a challenge.
Hmmm.
Maybe…
It is also possible that the bigger you are the more there is to rot.
These fraudsters should have been summarily fired, and the fact that they weren’t tells one a lot about that firm – none of it good.
Nothing has changed. In 1999 Deloittes made an error proven in the NSW Supreme court of $1.06m under the direction of ANZ bank. They still owe my wife and I that amount and will not pay their Bill