The Public Company Accounting Oversight Board is disciplining Deloitte Accountants NV, imposing a civil monetary penalty of $300,000 on the Netherlands member of the Deloitte Touche Tohmatsu Limited network.

The PCAOB said it was imposing the sanctions on the basis of findings that the Rotterdam-based firm violated rules and standards related to its system of quality control and independence. The independence violations occurred during audits of the 2011 and 2012 financial statements of the financial services company RBS Holdings and publisher Reed Elsevier because of financial interests that the spouse of the firm’s then CEO and managing partner, Piet Hein Meeter, held through a Dutch family foundation trust. Meeter is now Deloitte’s global leader of legal services.

The PCAOB found that from 2009 through the first quarter of 2012, the firm lacked adequate policies and procedures to provide reasonable assurance that individuals who became “covered persons” by being appointed to leadership positions in the “chain of command” were free of financial interests that might violate the Securities and Exchange Commission’s independence requirements.

Deloitte Netherlands has since taken steps to correct the problem. “The PCAOB findings relate to facts dating from 2012 and before,” said Deloitte spokesperson Wilma Bontes in an email Wednesday. “The issue involves investments held by the spouse of a tax partner who became CEO. The partner stepped down as CEO immediately when these issues became known. Since that time, Deloitte Netherlands has made substantial improvements to its quality control system in order to provide assurance that the firm is meeting all required independence standards.”

Earlier this month, the PCAOB also disciplined Deloitte’s firms in Brazil and Mexico, with the Brazilian firm agreeing to pay an $8 million settlement and the Mexican firm paying $750,000 to resolve auditing violations.
SEC approves board’s budget

Separately, the SEC voted Wednesday to approve the PCAOB’s $268.5 million budget for 2017, which will be funded by an accounting support totaling $268 million imposed collectively on the auditing regulated by the board.

“Reliable audits are a cornerstone of promoting investor trust and facilitating investment that grows capital markets and a healthy economy,” said PCAOB Chairman James Doty in his statement at Wednesday’s SEC hearing. “Experience tells us the PCAOB’s role is essential, and our standards and oversight programs are making a real difference on behalf of investors and companies. But as we’ve seen from both the PCAOB’s and the Commission’s enforcement programs, it is critically important that the PCAOB remain vigilant and independent, because persistent economic pressures can threaten the integrity of audits.”

PCAOB chairman James Doty

PCAOB chairman James DotyPhotographer: Rich Clement/Bloomberg

He noted that on the international front, in July, the PCAOB secured renewal of the European Commission’s adequacy determination, which allows the board to continue to conduct joint inspections with European regulators, The renewal runs for another six years, double the period of previous such determinations, allows the PCAOB to continue to deepen its relationships with local European regulators.

“The PCAOB’s mission to promote informative, accurate, and independent audit reports and to oversee auditors of public companies and SEC registered broker-dealers is critical to investor protection and our markets,” said SEC Chair Mary Jo White in a statement. “The 2017 budget provides the PCAOB with the funding necessary to continue to conduct inspections of auditors of U.S. public companies and broker-dealers, advance its research and standard-setting agendas, perform necessary economic and risk analysis, and conduct outreach. In furtherance of carrying out its mission in a cost-effective way, the PCAOB will undertake a study of operational efficiency and budgetary needs and submit a report to the Commission by mid-March next year.”