Deloitte Shows the Big 4 are Getting the Message

In a move that some would have viewed as astonishing before the accounting scandals that rocked the markets in recent years, Deloitte has dropped Margo Caribe as an audit client.  Its rationale behind the decision is the company was unable to meet a number of the requirements of SOX’s stringent 404 provisions.  Its violations included a lack of an adequate internal fraud detection and little segragation of duties.  Kudos to Deloitte for dumping a client it did not feel would remain a going concern.  One would hope that the firm, along with the rest of the Big 4, would do the same regardless of the size of the company.

That second point is the crux of the matter: is there any business rationale for a tiny company with less than $10M in revenue, hiring more people to segragate duties when such an action would presumably lower its profits significantly?  Clearly, SOX does need to be adjusted to take this into account.  If this is not done, either small companies will go private or shift their listings to less stringent foreign markets.

Check out the story at CFO.com.


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3 Responses to Deloitte Shows the Big 4 are Getting the Message

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  3. This is surprising to see as its common place for audit firms to turn a blind eye when the carrot of large consultancy fees are being dangled. Good move for deloitte.

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