Journal Entries Accounting

Navistar Sues Deloitte Proving No Statute of Limitations On Idiocy

A recent lawsuit filed by Chicago-area truck, bus, and defense vehicle manufacturer Navistar against their one-time auditor Deloitte disproves the adage, “The customer is always right.”

Navistar claims that Deloitte, their auditor for nearly one hundred happy years until they were ignominiously fired in early 2006, lied, deceived, was utterly incompetent, and left a trail of broken promises.

Sounds like a bad romance…

Navistar feels compelled, more than five years later, to sue Deloitte for, “fraud, fraudulent concealment, negligent misrepresentation, deceptive business practices, and breach of fiduciary duty arising from the accounting advice, audit services and internal controls advice that Deloitte provided to Navistar relating to Navistar’s financial statements from 2002 to 2005.”

Navistar’s problems began in late 2005 as Deloitte was wrapping up its audit for the fiscal year ending October 31, 2005. In December of 2005, Deloitte suddenly replaced the partner in charge of the audit  – he was put on mysterious medical leave – with a new one.

The new lead engagement partner, a former Arthur Andersen partner, began questioning almost everything that had been done or approved previously, according to Navistar’s suit. He refused to accept any of the work his former partners or the team had already done and basically, according to Navistar, started the audit over.

Navistar failed to file their 10-K on time as a result.

Navistar fired Deloitte in April 2006 and hired KPMG as their new auditor. They also hired a slew of consultants and other experts including Huron Consulting, Callaway Partners (now owned by Huron) , PricewaterhouseCoopers, and Ernst & Young. Eventually Navistar spent more than $200 million dollars to re-conduct their 2002-2004 audits, re-do and complete their 2005 audit, and reevaluate and correct a never-ending list of material weaknesses and significant deficiencies in internal controls over financial reporting.

Their 2005 financial statements were not completed until December of 2007.

The 2005 financial statements also identified necessary restatements to 2003 and 2004 that resulted in a cumulative net reduction in stockholders equity of more than $4 billion for the two years.

Naturally, Navistar blames Deloitte. That’s because Deloitte continued, according to Navistar, to be more than an auditor to Navistar until 2005, long after prohibitions against the provision of such significant accounting advice to an audit client were put into law.

SUNY Spent $500000 on Report | Artvoice Daily

On June 1, SUNY Chancellor Nancy Zimpher triumphantly rolled out a 132 page report entitled “How SUNY Matters.” The report was a joint product of the Nelson A. Rockefeller Institute of Government at SUNY Albany and the State University at Buffalo Regional Institute.

Among other things, the report estimated SUNY’s economic impact to be “at least” $20 billion to New York . It was widely covered in the media, as lawmakers in Albany debated things like raising tuition at state schools, and relinquishing state control of SUNY campuses, and so on.

You can download a copy of the report here . Full color photos, bar graphs, success stories, pull quotes—everything you’d expect from slick marketing materials. You really should download a copy, when you stop to consider that half a million dollars of public money paid for it.