Deloitte Relieved of Duties After Questioning Accounting Methods
Big Four firm Deloitte & Touche was dismissed from its role as auditor for SureBeam Corporation after expressing concern over SureBeam's compliance with generally accepted accounting principles. SureBeam is now in the market for a new auditor, having discharged Andersen, KPMG, and now Deloitte all in the span of less than a year and a half.
After the demise of Big Five firm Andersen, SureBeam hired KPMG to carry on its audit work, but in June 2003 KPMG was fired for charging too much for the audit work. Deloitte was hired to replace KPMG.
After a preliminary examination of SureBeam's accounting records, Deloitte questioned SureBeam's accounting treatment of the sale of equipment to a Brazilian company in 2000. Millions of dollars of revenue were recognized on the sale, but the money was ultimately not recovered. According to SureBeam's chief executive officer, John C. Arme, Deloitte "said they could not come to a conclusion as to whether accounting for that contract was proper."
In addition, Deloitte questioned the accounting treatment of a barter transaction where by SureBeam recognized revenue from the exchange of equipment for services with Texas A&M University.
According to Mr. Arme, some of SureBeam's accounting practices have been questioned by the Securities and Exchange Commission, but no request for a change in the company's accounting methods has been issued to date.
SureBeam Corporation makes systems that irradiate food to remove harmful bacteria. Using SureBeam's patented process, a food company can scan a food product and break down the DNA chains of bacteria that can cause illnesses such as E. coli, Listeria Monocytogenes, Salmonella, and Campylobacter.