On Oct. 31, PCAOB fined Deloitte partners re Mexico subsidiary.
- Follows audit of Prestaciones Finmart, that was a subsidiary of US firm EZCORP.
- EZCORP was loan provider with operations in countries including US and Mexico.
- Galaz, Yamazaki, Ruiz Urquiza, S.C., known as Deloitte Mexico, Ricardo Agustín
García Chagoyán, José Ignacio Valle Aparicio, Rubén Eduardo Guerrero Cervera.
- Partners had failed to appropriately evaluate company 2013-2014 loan reserves.
- As well as misrepresentations about that work, to principal auditors, Deloitte US.
- Deloitte US relied upon the work of audit subsidiary, in issuing two audit reports.
- Partners García, Valle and Guerrero failed to perform tests of loan classifications.
- Did not evaluate effectiveness of internal controls over financial reporting (ICFR).
- Sent falsifications to US auditor, which relied on the work for issuing audit report.
- Misclassification led to Finmart understating loan reserves and bad debt expense.
- Failed to recognize extent of Finmart nonperforming loans, with deficient control.
- EZCORP disclosed it had failed to maintain effective ICFR, during the time period.
- PCAOB barred and fined, three Deloitte Mexico partners, for deficiencies in audit.
- Imposed penalty of $50,000 each on García and Valle, and $30,000 on Guerrero.