Not Just India: US, China, and Canada Also Fine Deloitte for Violating Audit Standards

Global audit firm Deloitte has been fined about Rs 2 crore by the National Financial Reporting Authority (NFRA) for alleged lapses in auditing Zee Entertainment Enterprises (NS:ZEE) Ltd (ZEEL). This is not the first time Deloitte has been fined for auditing lapses.

In the last five years, many other countries including the US, China and Canada fined Deloitte for ignoring audit standards.

In China, the firm's operations suffered at the hands of both local and international regulatory bodies. The US Securities and Exchange Commission in September 2022 levied a fine amounting to $20 million against Deloitte's Chinese affiliate.

It was for compelling clients to conduct their audit work independently-a direct violation of auditing standards. Consequently, the Chinese regulators have fined China Huarong Asset Management Company 211.9 million yuan ($30.8 million) due to flaws in auditing, March 2023. Deloitte has been penalized by the Chinese regulators for failing to provide quality audits.

In the South American country of Colombia, in September 2023, the PCAOB found Deloitte & Touche S.A.S. responsible for violating quality control by imposing a penalty of $9,00,000. The PCAOB levied the fine on two of Deloitte's affiliates, both in Indonesia and the Philippines, totaling $1 million each for cheating during exams in April 2024. All these violations denote a general lack of following auditing standards and professional conduct.

Deloitte was fined $1.5 million in 2024 for violating professional conduct rules in Ontario Province, Canada. The company had failed to follow the guidelines according to the Canadian auditors.

Such cases have raised the issue of whether Deloitte is able to apply a level playing field across its global network. Being one of the Big Four, it is facing complex regulatory requirements in a number of countries. Thus, it is always on its toes regarding compliance.