Accounting/Financial Reporting
The Public Company Accounting Oversight Board takes Deloitte & Touche to task for errors in Ligand Pharmaceuticals audit
In its first disciplinary action against a large audit firm, the Public Company Accounting Oversight Board (PCAOB) levied a $1 million civil penalty against Deloitte & Touche LLP and disciplined a former audit partner for problems with the 2003 audit of Ligand Pharmaceuticals Inc. Later, Ligand had to restate, cutting sales $59 million and reporting a net loss 2.5 times the amount originally recognized.
At issue were charges that Deloitte left a partner on the audit who the firm had determined should not be assigned to public company audits because of concerns about his competency. “Because [some in] upper management had knowledge of this person’s competency, it raised issues about the firm’s accountability,” said Claudius Modesti, PCAOB director of the division of enforcement and investigations. Deloitte consented to the order without admitting or denying the findings, stating that it had, “on its own initiative,” implemented changes to quality control policies and procedures that address the PCAOB concerns.