Former Deloitte Brazil chairman Michael John Morrell, and former CEO and managing partner Juarez Lopes de Araujo, have been sanctioned for violations regarding failures to cooperate with the investigative board by The Public Company Accounting Oversight Board (PCAOB).
The PCAOB found that the former chairman and the CEO refused to cooperate with their investigation. Morrell was barred from associating with a PCAOB-registered firm for five years, and imposed on him a civil penalty of $35,000. Lopes de Araújo was permanently barred from associating with a PCAOB-registered firm.
These sanctions follow a PCAOB enforcement order from December 2016 against Deloitte Brazil, in which the PCAOB found that the firm and certain individuals had attempted to cover up audit violations, including issuing materially false audit reports and attempting to cover up audit violations by improperly altering documents and providing false testimony.
Deloitte Brazil admitted to violating quality control standards and failing to cooperate with the PCAOB investigation. It therefore agreed to pay a record $8m civil penalty to settle charges.
“The order announced today against the former Chairman of Deloitte Brazil makes clear that the misconduct at the firm went all the way to the top, and our investigation persisted until we uncovered the extent of wrongdoing," Claudius B. Modesti, director of PCAOB Enforcement and Investigations said.
Deloitte Brazil first Big Four to admit violating quality control standards to the PCAOB