SEC to Ban Adelphia Auditor

The former Deloitte auditor contributed to Adelphia's securities violations, said the SEC.
Stephen TaubJuly 28, 2006

The engagement partner in charge of Deloitte and Touche’s audit of Adelphia Communications was banned for life from appearing before the Securities and Exchange Commission, according to an initial decision by an SEC Administrative Law Judge.

In its decision, the SEC concluded that former Deloitte auditor Gregory Dearlove engaged in improper professional conduct, and that Adelphia violated the reporting and record keeping provisions of the Securities Exchange Act of 1934. The SEC also said that Dearlove was a cause of Adelphia’s violations.

Specifically, Dearlove signed an unqualified report stating that: Deloitte had conducted its audit for the year ended December 2000 in accordance with Generally Accepted Auditing Standards (GAAS); Adelphia had prepared its financial statements in conformity with Generally Accepted Accounting Principles (GAAP); and that the financial statements fairly presented Adelphia’s financial condition.

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“The Initial Decision determines that Adelphia’s 2000 financial statements were materially false and misleading and failed to comply with GAAP in several respects,” said a notice published by the SEC. The notice also stated that Dearlove violated GAAS in directing and supervising the audit, and in signing the report on behalf of Deloitte.

Dearlove may seek a review of the decision, according to the Associated Press, which added that the SEC decision won’t be final until it is approved by the five SEC commissioners.

The SEC’s decision does not require Dearlove to disgorge his salary, which the AP estimated to be $144,000.

Currently, Dearlove works for Computer Task Group, a provider of computer services, noted the wire service.