Troubles for Deloitte

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The American government has terminated its contract with an international accounting firm that was providing technical advice to the Afghan banking system here because of the firm’s failure to report signs of trouble at Kabul Bank, the nation’s largest financial institution.

The United States Agency for International Development ended the banking portion of a contract with the firm, Deloitte, which had staff members working as advisers to Afghanistan’s Central Bank, according to a report released Wednesday by the inspector general for the aid agency.

Questions:

1. What was the overwhelming reason for firing Deloitte?

2. Based on the article, how long had Deloitte been on this engagement?

3. Explain how the $850 million fraud was committed.

Source:

Rubin, A. J. and J. Risen. (2011). U.S. Agency Ends Accounting Firm’s Afghan Contract, The New York Times, March 17 (Retrievable online at http://www.nytimes.com/2011/03/18/world/asia/18afghan.html?_r=1&src=un&feedurl=http%3A%2F%2Fjson8.nytimes.com%2Fpages%2Fworld%2Fasia%2Findex.jsonp)