Talk About a Captive Auditor ...
WASHINGTON (CN) - The SEC on Tuesday accused the former chief risk officer of Deloitte LLP of taking tens of thousands of dollars in casino markers while he was the advisory partner of Deloitte & Touche's audit of a casino corporation.
The SEC filed an administrative cease-and-desist order against James T. Adams, CPA.
According to the administrative order: "While Adams was serving as the advisory partner on D&T's 2009 Casino Gaming Issuer audit, he sought and received casino markers from a casino operated by the issuer. He visited the casino at least five times during this period and signed a number of casino 'markers.' A casino marker is an instrument utilized by a casino customer to receive gaming chips drawn against the customer's line of credit at the casino. Adams had opened a line of credit with the casino on June 9, 2004 and increased that line of credit from $100,000 to $110,000 on December 16, 2009.
"Adams drew down his line of credit by using markers at the Casino Gaming Issuer's casino while he was the advisory partner for D&T's Casino Gaming Issuer 2009 audit engagement. Specifically, on July 29, 2009, Adams drew markers, $85,000 of which remained outstanding for a period of 43 days. On September 15, 2009, he drew markers, $3,000 of which remained outstanding for a period of 13 days and $70,000 of which remained outstanding for a period of 27 days. On October 13, 2009, Adams drew markers, $110,000 of which remained outstanding for a period of 38 days. On December 8, 2009, he drew markers, $100,000 of which remained outstanding for seven days. On December 16, 2009, Adams drew markers, $110,000 of which remained outstanding.
"On January 13, 2010, D&T removed Adams from the Casino Gaming Issuer 2009 audit engagement, for reasons that were not based on his use of casino markers. Adams subsequently defaulted on the $110,000 of outstanding markers that he drew on December 16, 2009.
"Adams concealed from D&T the fact that he had drawn casino markers from Casino Gaming Issuer and in fact lied to a D&T partner when he was asked generally if he had casino markers from attest clients of the firm. Accordingly, at the time that Adams retired, D&T was not aware of his casino markers from Casino Gaming Issuer.
"On March 9, 2010, Casino Gaming Issuer filed its annual Report on Form 10-K for its fiscal year ended December 31, 2009. The annual report included a D&T audit report that stated that its audit of the financial statements of Casino Gaming Issuer had been conducted in accordance with the standards of the PCAOB. Because of Adams' conduct described above, that statement was incorrect."
Adams settled the charged by agreeing to a two-year suspension before the SEC, the SEC said in a statement.