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Deloitte must defend lawsuit over audit of Philip Services

U.S. District Judge Michael Mukasey has ruled that Deloitte & Touche LLP must defend a suit that alleges it issues...


U.S. District Judge Michael Mukasey has ruled that Deloitte & Touche LLP must defend a suit that alleges it issues flawed audits for Philip Services Corp., the Hamilton-based company that was once one of North America’s largest environmental service providers and scrap recyclers. Philip, also an erstwhile stock market darling, went bankrupt in 1998 after announcing it would restate financial results for the three previous years. Investors sued the company and Deloitte, which was the company’s auditor.

The New York judge did not rule on the merits of the case but said that investors made sufficient allegations to warrant going forward, and refused to dismiss the class action case.

The suit claims that Deloitte failed to disclose that Philip Services violated U.S. and Canadian accounting principles. The case has been pending a long time and tied up on a number of procedural issues.

Source: Financial Post, with files from Bloomberg News.


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