The Public Company Accounting Oversight Board (PCAOB) has fined Deloitte Canada $350,000 for failing to maintain its independence during three consecutive audits of Canada-based gold mining company Banro Corporation.

The PCAOB found Deloitte’s independence was impaired during its 2012, 2013 and 2014 audits of Banro because of technical reports that were issued by a South African mine-consulting company, Venmyn Deloitte, which was an affiliate of Deloitte Canada.

In its 2013 and 2014 technical mining reports and media releases, Venmyn Deloitte acknowledged responsibility for Certain Banro gold resources and reserve estimates. The PCAOB found this impaired Deloitte Canada’s independence because both Deloitte Canada and Banro were seen to have a mutual interest in Banro’s estimates being proved correct.

PCAOB’s acting director of enforcement and investigations Mark Adler said: “Deloitte Canada was in essence auditing its own work during the 2012 audit of Banro by relying on Venmyn’s valuation of Banro’s mining assets, in clear violation of independence rules.

“This case also emphasises the need for auditors to consider not only the types of non-audit services provided to clients, but also the impact of public statements made to investors when providing those services.”

Venmyn Deloitte, formerly known as Venmyn Rand, became an associated entity of the firm when it was acquired by Deloitte South Africa in 2012. Thereafter, Venmyn Deloitte was considered part of Deloitte Canada for purposes of the auditor independence rules of the Securities and Exchange Commission.

Deloitte Canada did not admit or deny the findings of the PCAOB but agreed to be censured and to undertake a review of its independence policies and procedures and its independence training. The firm will also have to report to the PCAOB the results of its reviews and any changes made.

Deloitte Canada said in a statement: "The matter had no impact on the client’s financial statements or the audit opinions on those financial statements. Deloitte Canada made judgments at the time on the application of the independence rules. The PCAOB has concluded that these judgments were not consistent with the independence rules. Deloitte Canada accepts that conclusion."