Former Delphi auditors suspended by SEC

By Caroline Salls

Pittsburgh, Feb. 26 - Two former Delphi Corp. auditors from Deloitte and Touche LLP have been suspended from appearing or practicing before the Securities and Exchange Commission in connection with charges of improper professional conduct related to 2000 and 2001 audits of Delphi's financial statements, according to an SEC news release.

Specifically, the SEC said it found that former Deloitte and Touche engagement partner Nicholas Difazio engaged in improper professional conduct in auditing Delphi's improper accrual of an estimated warranty expense by its former parent as a direct charge to equity in the second quarter of 2000, rather than as an expense in accordance with Generally Accepted Accounting Principle.

The SEC said Difazio also engaged in improper professional conduct in connection with Delphi's improper classification of most of a $237 million payment settling the former parent's warranty claims to pension and other post-employment benefit "true-up," causing the amount to be accounted for as prepaid pension cost in the third quarter of 2000.

Difazio also faced charges related to Delphi's failure to account for the fourth-quarter 2000 sale and repurchase of batteries and generator cores as a financing transaction.

In a separate order, the commission found that Duane Higgins engaged in improper professional conduct in connection with the battery and generator core sale issue and with Delphi's failure to account for the simultaneous execution of agreements to sell and repurchase precious metals in the fourth quarter of 2000 as a financing transaction.

Difazio can reapply to practice before the SEC after three years, and Higgins can reapply after two years, according to the release.

Delphi is a Troy, Mich., based automotive electronics manufacturer that filed for bankruptcy protection on Oct. 8, 2005 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 05-44481.

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