Remember the hipster drama Deloitte caused this past summer when they resigned as the auditor of American Apparel? It was quite the r s the stock took a beating (it has recovered in the meantime) and questions were raised about the company’s ability to continue as a [g]oing [c]oncern.
Some recent developments in this particular story have come to light as Dov & Co. have been providing a whole mess of information to Deloitte, as is SOP in these matters. For starters, Deloitte notified the APP audit committee that the 2009 financial statements are not kosher and anyone using them for any other purpose than lining a bird cage is nuts.
From the 8-K:
On December 15, 2010, the Audit Committee of the Company received notice from Deloitte stating that Deloitte had concluded that Deloitte’s report on the Company’s previously issued consolidated financial statements as of and for the year ended December 31, 2009 (the “2009 financials”), including Deloitte’s report on internal control over financial reporting at December 31, 2009, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (such reports, collectively, the “Deloitte Reports”) should not be relied upon or associated with the 2009 financials.
Deloitte explained that its conclusion was based on the significance of the declines in operations and gross margin in the Company’s February 2010 monthly financial statement, combined with the January 2010 monthly financial statements, the Company’s issuance of revised projections in early May 2010 which reflected a significant decrease in the Company’s 2010 projections, and Deloitte’s disagreement with the Company’s conclusion that the results shown in the February 2010 monthly financial statements would not have required a revision to the Company’s projections as of the date of the 10-K filing and the issuance of Deloitte’s reports. Deloitte further indicated that their decision considered their inability to perform additional audit procedures, their resignation as registered public accountants and their professional judgment that they are no longer willing to rely on management’s representations due to Deloitte’s belief that management withheld from Deloitte the February 2010 monthly financial statements until after the filing of the 2009 10-K and made related misrepresentations.
So if you can get past how poorly written these paragraphs are, you can boil down Deloitte’s concerns about the 2009 10-K to a few things: 1) business was not looking good; 2) they didn’t buy APP’s notion that financial projections for February ’10 were hunky dory (which weren’t made available until after the 10-K was filed); 3) APP management was more or less full of shit. You can also read their official letter to the company, if you are so inclined.
You won’t be surprised to learn that Dov & Co. have a difference of opinion here:
The Audit Committee of the Company has commenced an investigation into the assertions that management withheld the February 2010 monthly financial statements and related misrepresentations. Management disagrees with Deloitte’s assertions and does not believe that the February 2010 monthly financial statements were withheld. The Company does not currently believe, including after discussions with Marcum, that the reaudit will result in any changes to the 2009 financials, though no assurance can be given in this regard.
So, somewhere, there are February 2010 financial statements stuffed in a drawer (but whose drawer?) that basically caused this whole fiasco. This seems like a completely plausible scenario.
Ah yes, Deloitte deliberately messed up the unemployment system at the request of Florida Governor Scott.
Every year I teach ethics to accounting students I seem to get a gift from the powers that be.
I would agree. As a tax partner at a middle market firm, I can tell you this is true
Sounds like a bunch of salty complaints that just don’t have something that would have set them apart from the rest of the field. Stop complaining and go develop something innovative.
It happens with all of them – Accenture and IBM as well. Just look at the contract Accenture had with Homeland security to ramp up border security training and hiring.
https://www.oig.dhs.gov/sites/default/files/assets/Mga/2018/oig-19-13-nov18.pdf
Spend 30 min with Google and you’ll find plenty more.. start with the health exchanges and the infamous upgrade that has yet to happen to the national air traffic control system.
True, consultants are overrated. DTT is chosen because of its price, Accenture is a completely different animal when comes to price, and actually reflective of their end products. I know they also had bad marks over the years, that’s because of lack of enforcement from the state, you give them an opportunity to Milk you, asking for exploitation, they are a profit orientated company after all. Government don’t care because it’s not Their money, it’s your tax money.
Private consultancy contracts has higher rate of delivering good products from both as common sense.
I once knew a guy who worked for DTT consulting, quit because finds it too unethical, giving out promotions to staff twice a year upon joining that year as a graduate – only because they can charge more to clients with higher titles – that sums it up.
Without consulting DTT hardly make any profits period.
well Accenture doesn’t help their employees get on projects. Managing Directors do nothing to help.. actually the only time they setup meetings with you is when they need to lay you off..
Of course they talk about “The Accenture Way” as the best way.. The Accenture Way is to give 2 weeks severance during COVID19. What a bullshit company. My advice is to never work for that shitty company
Accenture is just as bad. First hand experience.
What kind of trash article spewing BS for Accenture?