As part of the settlement with the US regulator, Deloitte Canada also agreed to be censured and to undertake a review of its independence policies and procedures and its independence training, and to report to the PCAOB the results of its reviews and any changes made.

The PCAOB said Deloitte Canada’s independence from Banro was impaired during its 2012, 2013, and 2014 audits of the because of technical reports that were issued by a South African mine-consulting company, Venmyn Deloitte Ltd., which was an affiliate of the firm.

Mark Adler, PCAOB acting director of enforcement and investigations, said: ‘Deloitte Canada was in essence auditing its own work during the 2012 audit of Banro by relying on Venmyn’s valuation of Banro’s mining assets, in clear violation of independence rules.

‘This case also emphasizes the need for auditors to consider not only the types of non-audit services provided to audit clients, but also the impact of public statements made to investors when providing those services.’

Venmyn Deloitte, formerly known as Venmyn Rand Ltd, became an associated entity of the firm when it was acquired by Deloitte & Touche (Deloitte South Africa) in 2012. Thereafter, Venmyn Deloitte was considered part of Deloitte Canada for purposes of the auditor independence rules of the Securities and Exchange Commission.

In its 2013 and 2014 technical mining reports, and in company media releases, Venmyn Deloitte publicly acknowledged responsibility for certain Banro gold resource and reserve estimates, which impaired Deloitte Canada’s independence because both Deloitte Canada and Banro were seen to have a mutual interest in Banro’s estimates being proved correct.

The firm settled with the PCAOB without admitting or denying the findings.

PCAOB’s settlement decision regarding Deloitte Canada is here

Report by Pat Sweet