Three of the four Deloitte audit partners on the Livent Inc. file have lost in the Ontario Court of Appeal.
Livent Inc. was a public company that promoted live musical entertainment and musical theatre in Canada and the United States. It was also involved in the construction and management of theatres. At the relevant time, Garth Drabinsky and Myron Gottlieb were Livent’s largest shareholders and its two most senior officers. Deloitte & Touche LLP was Livent’s auditor for the fiscal years 1989 to 1997. The three partners were senior members of the Deloitte audit team responsible for the 1997 Livent audit. In April 1998, Deloitte released an unqualified audit opinion approving the 1997 financial statements of Livent. Later in 1998, under new management, serious financial irregularities were discovered in Livent’s books. An internal investigation resulted in the re-statement of Livent’s 1996 and 1997 financial statements, and criminal fraud charges were brought against Drabinsky and Gottlieb.
The ICAO, the licensing and governing body of chartered accountants in Ontario, subsequently brought charges of professional misconduct against four senior Deloitte accountants involved in the 1997 audit. They were charged with professional misconduct for allegedly having failed to adhere to accounting and auditing standards.
For further details of the subsequent events, please see the cogent decision here: http://www.canlii.org/en/on/onca/doc/2011/2011onca409/2011onca409.html
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