The Public Company Accounting Oversight Boardissued disciplinary orders yesterday against Deloitte & Touche and former Deloitte partner James Fazio for a audit of Ligand Pharmaceuticals.
The audit firm regulator fined Deloitte $1 million and forced it to undertake improvements to its quality control policies. Fazio was barred from being associated with a public accounting firm for two years, after which he may file a petition to allow him to work in the profession again.
The disciplinary action is the first the PCAOB has undertaken against a Big Four firm and one of its partners.
The enforcement action was related to the 2003 audit of Ligand in which the company underestimated product returns and overstated revenue. The PCAOB alleges that Mr. Fazio “failed to perform appropriate and adequate procedures” relating to Ligand’s revenue recognition practices and also failed to ensure that others performed such procedures.