In any other kind of firm, in any other profession, what these guys did would be cause for termination.
Deloitte accountant, banned from public company audits for two years after Adelphia debacle, is reinstated by SEC
A senior Deloitte accountant who audited Adelphia Communications Corp.’s fraudulent financial statements in 2000 has been reinstated by the Securities and Exchange Commission after being banned from auditing public company statements for two years.
William Caswell, who headed a team of 20 accountants and tax professionals and reported to Deloitte’s engagement partner during Adelphia’s audit in 2000, assisted the SEC investigation into shortcomings surrounding Deloitte’s 2000 audit and “has shown good cause for reinstatement,” a June 25 commission order said.
Caswell engaged in improper professional conduct by failing to ensure adequate disclosure of Adelphia’s liabilities and related-party transactions, a September 2005 SEC order said. It said he could apply for reinstatement in two years, which he did.
In one instance, Caswell and others proposed that Adelphia disclose $1.6 billion of debt borrowed by the company and related parties. He followed up by inserting this disclosure in at least six drafts of Adelphia’s 2000 annual report. But Caswell dropped his efforts in the face of resistance from Adelphia executives and the Deloitte audit partner, the 2005 order said.
Deloitte spokeswoman Deb Harrington declined comment. In a response to a request to speak with Mr. Caswell, Ms. Harrington said he declined comment. Mr. Caswell, as part of his 2005 settlement with the SEC, neither admitted nor denied wrongdoing.
SEC spokesman John Nester said he knew of no federal data to show how common or uncommon it is for a disbarred accountant to be reinstated by the commission.
Deloitte, one of the Big Four U.S. accounting firms, agreed in 2005 to pay a $50 million penalty to the SEC without admitting or denying misconduct. After several appeals, Caswell’s supervisor, Gregory Dearlove, was barred in January 2008 from auditing public company statements. He can apply for reinstatement in four years.
Mr. Caswell had examined Adelphia’s finances for six years prior to Deloitte’s 2000 audit of the firm. Mr. Dearlove, who had little or no experience in auditing cable-TV companies, had been briefed on the company’s statements but hadn’t supervised an Adelphia audit, the January SEC order said.
Adelphia filed for bankruptcy protection in 2002 and agreed to pay $715 million to a victims’ restitution fund. Adelphia founder John Rigas and his son Timothy were convicted of criminal charges and sentenced to prison. Adelphia vice president of finance James Brown and its accounting director, Tim Werth, both pleaded guilty to criminal charges.