As previously discussed here, the high-profile failures of many Big 4 audit clients in the financial sector can mean greater litigation risk and the possible loss of a significant client engagement for auditors. The collapse of Washington Mutual appears to be presenting both challenges to its auditor, Deloitte.
The Puget Sound Business Journal reports that the demise of Washington Mutual may result in a hit to Deloitte on multiple fronts. WaMu paid Deloitte $15 million in fees in 2007. If Deloitte loses the audit work to the the acquiring company’s auditor, Pricewaterhouse Coopers, that could mean reduced revenues or possible layoffs in Deloitte’s Seattle office, according to the Puget Sound Business Journal.
In addition, the article notes that
Deloitte has been named as a defendant in a securities lawsuit against Washington Mutual. The class-action complaint, filed Aug. 5 by New York-based Bernstein Litowitz Berger & Grossmann, alleges Deloitte didn’t exercise sufficient care and diligence in its reviews of WaMu’s financial statements in annual reports.