PCAOB Fines Ex-Deloitte Accountant Over Navistar Audit
August 12 2009 - 1:36PM
Dow Jones News
The Public Company Accounting Oversight Board said Wednesday it
has fined a Deloitte & Touche partner $75,000 for allegedly
helping Navistar International Corp. (NAV) and unit Navistar
Financial Corp. avoid restating 2003 financial results.
This marks the second time the U.S. oversight board for public
company auditors has ever assessed a civil money penalty against an
individual accountant since it was created by Congress in 2002. The
other fine was also against a Deloitte partner for signing off on
Navistar's erroneous 2003 financial results.
In the latest case, the PCAOB said Chicago-based Deloitte
accountant Thomas J. Linden has consented to pay the $75,000 fine
without admitting or denying the allegations. He is also barred
from being associated with a registered public accounting firm, but
can petition the board to be reconsidered in two years. He no
longer works for Deloitte, and the company was not named in the
proceeding.
A lawyer for Linden declined to comment, and a spokeswoman for
Deloitte said the company is "pleased that Mr. Linden resolved this
matter with the PCAOB."
According to the PCAOB, Navistar Financial discovered in 2003 it
had $19.7 million worth of errors in its financial statements,
which boosted its earnings, revenue and assets.
The parent company, however, had already announced its
fourth-quarter earnings when the overstatement was discovered.
The PCAOB said that Linden "helped Navistar International
Corporation avoid the possibility of a revision of its reported
results."
His actions included issuing an audit work paper that
inaccurately characterized the reasons for the increase and
successfully pushing to increase the normal threshold for
determining when something is significant enough to be considered
"material."
Last year, Deloitte partner Christopher Anderson was also fined
$25,000 for his role in the Navistar audit.
Navistar has had numerous problems in the past with its
accounting. It was forced at one time to restate earnings for
several fiscal years and previously announced the Securities and
Exchange Commission was investigating the matter.
To date, the SEC has not filed any charges against the
company.
Navistar suffered accounting woes yet again last year,
announcing in December it planned to restate its reported net
income for the first nine months of its fiscal 2008.
In 2007, it was also delisted by the New York Stock Exchange for
failing to comply with filing requirements. The shares were
relisted in June 2008.
The PCAOB, which was created through the Sarbanes-Oxley Act
following the major accounting scandals at Enron, Tyco and
WorldCom, has only ever assessed three money penalties since it was
formed. In addition to the two individual monetary penalties
against the Deloitte partners, it also fined Deloitte & Touche
$1 million in a separate, unrelated case.
-By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634;
sarah.lynch@dowjones.com