(OTS) Thos Mason (202) 906-6688
(RTC)Felisa Neuringer (202) 416-7556
(FDIC) David Barr (202) 898-6992
WASHINGTON, D.C., March 24, 1994 -- Deloitte & Touche (D&T),
a "Big Six" accounting firm, has agreed to pay $312 million to the
federal government to settle claims based on alleged accounting and
auditing failures at banks and savings and loan institutions it
In a global settlement of all claims and charges brought by
federal regulators, the accounting firm has agreed to pay $236.8
million to the Resolution Trust Corporation (RTC) and $75.2 million
to the Federal Deposit Insurance Corporation (FDIC) and consented
to cease and desist order of the Office of Thrift Supervision
(OTS). The settlement resolves 15 pending suits brought by the
RTC, three suits brought by the FDIC and resolves all other
potential RTC, FDIC and OTS claims as well concerning failed
The OTS cease and desist order mandates that Deloitte & Touche
partners and managers have specified levels of training and
experience for auditing insured depository institutions, orders
them to comply with specific professional standards and defines
quality control functions to be performed by partners on each
insured depository institution audit. OTS also directs Henry
Forer, a retired former partner and national director of D&T's
savings and loan practice, not to perform any accounting services
for thrifts for five years.
The OTS notice claimed that D&T's personnel failed to apply
generally accepted accounting principles (GAAP) and generally
accepted accounting standards (GAAS) in the audits of certain
thrift institutions, their holding companies, subsidiaries and
Specifically, OTS charged D&T with failure to disclaim or
qualify its opinions because of its clients':
* Failure to account for hedges in accordance with GAAP in
its audits of Franklin Savings and Loan Association, Ottawa, Kan.
* Failure to mark trading accounts to market in accordance
with GAAP in its audits of Columbia Savings & Loan Association,
Beverly Hills, Calif.
* Failure to audit allowances for loan losses in accordance
with GAAP and GAAS in its audits City Federal Savings Bank,
* Failure to account for loans to facilitate the sale of
real estate owned for in-substance foreclosures in accordance with
GAAP in its audits of Sun Savings & Loan Association, Parker, Colo.
* Failure to account for sale/leaseback transactions in
accordance with GAAP in its audits of First America Savings Bank,
FSB, Longmont, Colo.
* In addition, OTS charged D&T with failure to properly
D&T had denied the claims made by the RTC and FDIC, and
stipulated in its offer of settlement to the OTS order that it
neither admitted nor denied the OTS charges.