Deloitte & Touche LLP has reached settlements related to the 2000 audit of Adelphia and the 1998 audit of Just For Feet. Each of these cases involves a consent decree, signed by Deloitte & Touche LLP, in which it neither admits
nor denies wrongdoing. These two settlements are the first enforcement cases for Deloitte & Touche LLP since Deloitte & Touche was formed by combination in 1989.
Deloitte & Touche LLP believes that the settlements are in the best interest of its people, clients and the organization.
As a condition of the Adelphia settlement, Deloitte & Touche LLP will pay a $25 million penalty, plus a $25 million contribution to a fund to compensate Adelphia shareholders and debt holders. Deloitte & Touche LLP also has agreed on steps for enhancing audit quality for its clients. As part of the settlement on Just For Feet, there will be a payment of $375,000 to the U.S. Treasury. Neither of the settlements restricts Deloitte & Touche LLP's ability to provide services to new or existing clients.
In both the Adelphia and Just For Feet cases, the primary basis of the SEC's claim is that the audits were deficient and failed to uncover fraud committed by the companies and certain members of their management in the face of identified risks.
