The trustee, Andrew Boynton, has been charged with causing related reporting violations by the funds, and the funds’ administrator, ALPS Fund Services, has been charged with causing related compliance violations. They have also agreed to settle the charges.

 According to the SEC, Deloitte broke the rules on independence by failing to follow its own policies and conduct an independence consultation prior to entering into a new business relationship with Boynton.  Deloitte failed to discover that the required initial independence consultation was not performed until nearly five years after a relationship had been established between Deloitte Consulting and Boynton, who was paid consulting fees for his external client work. 

During this period Deloitte represented in audit reports that it was independent of the three funds while Boynton simultaneously served on their boards and audit committees.

Deloitte Consulting acquired a proprietary brainstorming business methodology from Boynton in 2006 and collaborated with Boynton to implement it and serve both internal and external firm clients through 2011.

As a member of the three funds’ boards and audit committees, Boynton was required to complete annual trustee and officer questionnaires designed in part to identify conflicts of interest.  Boynton did not identify his business relationship with Deloitte Consulting in response to a question calling for identification of his ‘principal occupation(s) and other positions.’

Relying on his understanding that Deloitte Consulting was a separate legal entity from Deloitte, Boynton also did not identify the business relationship in his responses to a question added to the questionnaire in 2009 inquiring whether he had any ‘direct or material indirect business relationship with Deloitte, the SEC said.

Stephen Cohen, associate director of the SEC’s division of enforcement, said: ‘The investing public depends on independent auditors like Deloitte to test the reliability of publicly-reported financial statements, and they have front-line responsibility for ensuring their own independence. But they are not alone in safeguarding the audit process, and the other fiduciaries charged in this case failed to fulfil their roles and preserve investor confidence.’

Under the terms of the settlement, Deloitte agreed to pay disgorgement of audit fees in the amount of $497,438 plus prejudgment interest of $116,478 and a penalty of $500,000.  Boynton agreed to pay disgorgement of $30,000 plus prejudgment interest of $5,329 and a penalty of $25,000. ALPS agreed to pay a $45,000 penalty.

A spokesman for Deloitte said the company 'self-identified' the independence matter after it had put in place enhanced procedures and voluntarily reported it to the SEC in March of 2012.

In a statement Deoitte said: 'As an organisation committed to safeguarding the capital markets, we strive for continuous improvement. We are pleased to resolve this matter and are confident that our enhanced policies, training and monitoring will maintain ongoing compliance.'