backOn April 10, 2024, the PCAOB announced settlements with Imelda & Raken (“Deloitte Indonesia”), Navarro Amper & Co. (“Deloitte Philippines”), and Deloitte Philippines’ former National Professional Practice Director (“NPPD”), Wilfredo Baltazar, for violations of PCAOB rules and quality controls standards relating to answer sharing on training exams.
According to the PCAOB, more than 200 professionals at Deloitte Indonesia engaged in answer sharing between 2021 and 2023, notwithstanding warnings from Deloitte Global and regional leadership that answer sharing was improper. The PCAOB alleged that Deloitte Indonesia failed to establish quality control policies and procedures related to integrity and personnel management. The order notes that Deloitte Indonesia provided extraordinary cooperation by self-reporting the conduct to the PCAOB, by conducting and providing the PCAOB the results of an internal investigation into the answer sharing, and engaging in voluntary remedial efforts.
With respect to Deloitte Philippines, the PCAOB alleged that the firm failed to establish appropriate policies and procedures for administering and overseeing training tests, which prevented the firm from identifying that nearly all its audit partners from 2017 to early 2019, including its then-NPPD, engaged in answer sharing. According to the PCAOB, the NPPD identified that Deloitte Philippines partners had fallen behind on completing trainings because of high utilization rates and, in response, the NPPD emailed answers to the audit partners and other professionals at least six times between 2017 and 2019. The order notes that Deloitte Philippines provided extraordinary cooperation by conducting and providing the results of its internal investigation to the PCAOB and engaging in voluntary remedial efforts. The PCAOB separately settled with the former NPPD, who was responsible for online training and assessments. The order states that the former NPPD violated PCAOB Rule 3502, by knowingly and recklessly contributing to Deloitte Philippines’ violations of quality control standards; the order did not find he violated PCAOB interim ethics standards. Along with the order against the KPMG Netherlands partner discussed above, this is the first time an individual has settled charges related to answer sharing.
Deloitte Philippines and Deloitte Indonesia were both censured, fined $1,000,000 each, and required to establish or augment their policies and procedures to provide reasonable assurance that: (1) personnel will perform training with integrity, (2) personnel to whom work has been assigned have the technical training and proficiency required, and (3) personnel participate in general and industry-specific continuing professional education. The former NPPD at Deloitte Philippines was censured, barred from being an associated person with the ability to apply for reinstatement after three years, and required to pay a civil money penalty of $10,000.