DART's Outside Auditor Seems Too Inside to Expose Secrets

We're over the game of hide the ball with Deloitte Touche

Here is what you need to know about DART, the regional transit agency whose recently resigned chairwoman turned herself over to the cops recently on document-tampering charges: You don't know nuthin'. And you're not going to know.

For instance, after news broke of the charges against DART chair Lynn Flint Shaw, Deloitte Touche, the company that's supposed to serve as independent outside auditor for DART, informed DART that it kinda sorta had a little Lynn Flint Shaw problem too.

Turns out Deloitte had a side deal with Shaw—the board member who had moved to approve its million-dollar contract—in which it paid her $20,000 a year to give the firm advice on how to get black high school kids interested in careers in accounting. Deloitte and Shaw had forgotten to tell anybody else at DART about the deal.

William Velasco was the only member of the DART board who dared to say that the Deloitte Touche deal with Lynn Flint Shaw smelled to high heaven.
Courtesy of Dallas Area Rapid Transit
William Velasco was the only member of the DART board who dared to say that the Deloitte Touche deal with Lynn Flint Shaw smelled to high heaven.

On the Web you can find a flowery compendium of rules and standards to which Deloitte Touche says it holds itself called "Ethics and Professional Conduct: Personal Integrity, Public Trust."

Sounds great, eh? Deloitte says, "The people of Deloitte & Touche USA are pledged to maintaining independence, both in fact and appearance, from clients of the Deloitte U.S. entities in exercising appropriate professional responsibilities."

Deloitte's promise to clients is that it will not enter into any agreement with anybody inside the client's organization that might compromise Deloitte's independence and objectivity. Specifically, Deloitte says, its rules prohibit Deloitte from any arrangement to "render any service or enter into any supplier agreement" with its clients. That way the client firm can rest easy that Deloitte is coming to the audit with clean hands.

Umm. So then. Given these very stringent rules that Deloitte Touche says it holds itself to and which it publishes so proudly on the Web, how did Deloitte happen to wind up in the smelly $20,000 side deal with Shaw that they decided to reveal only at the last minute when they learned people were getting toted down to the grand jury to answer questions?

I tried hard to get Deloitte Touche spokesman Jerry Bennett to talk to me about the situation. I wound up asking him if Deloitte actually has anything that we could call real ethical standards. He said, "I don't believe that's information that we share."

I think that may have been an honest answer, in a funny kind of way.

So Deloitte ain't talkin'. I was really hoping DART's top lawyer Hyattye (pronounced Highty) Simmons would help us understand the underlying ethical issues when he made his investigative report last week to the DART board. But he sounded worse than the Deloitte guy.

Simmons put this slide up on a screen that looked sort of like a flow chart, showing how Deloitte's headquarters are in Switzerland and they have several divisions in the United States. The service division that did the side deal with Shaw, he said, was not the same division that does DART's "independent" outside audit.

He repeated several times that Deloitte has arranged its divisions in a semi-autonomous structure designed to shield each division from the liabilities of the others. I'm sitting in the audience thinking, "Yeah, check me on this, but I think that's what Al Qaeda does too. How does this help us with the question of whether the Shaw side deal was ethical?"

Most of the DART board just sat there like stooges, apparently eating this stuff up, when, thank goodness, Dallas board member William Velasco II took Simmons to task:

"I want to give you an analogy," Velasco said. "About five years ago, prior to me being reappointed to the DART board, I had a phone call from the city secretary's office. My daughter had library debt of $17.22. I was given a choice. Go down there and pay it, and I get re-appointed."

Velasco said he didn't understand why, if he couldn't escape responsibility for his daughter's library fine, the auditing branch of Deloitte could escape responsibility for another division's $20,000 a year contract with Shaw. Pointing to Simmons' flow chart, Velasco said, "You're trying to tell me with this whole system here that only that branch should be held responsible? I take responsibility for my family and their actions. Deloitte Touche, to me, should take responsibility for their actions."

I have these little moments sitting out there in the peanut gallery sometimes when I have to fight back a powerful impulse to stab one fist in the air and shout, "Hurrah! Hurrah for this man!" This was one of those.

We taxpayers don't give a damn what kind of clever legal arrangements Deloitte Touche has cooked up to protect itself from liability. We're not liability experts. If it says Deloitte Touche on the door, it's Deloitte Touche. Velasco is right.

Of course, if Deloitte Touche thinks it has got some kind of super-technical clever system that allows it to do side deals with directors of the entities it audits, then the free market remedy is for DART to go get a new auditor who will promise not to jack around.

But what about DART? That's the part that we own. That's what belongs to us. So why is DART's top lawyer defending this crap to the board and, by extension, to us? Who the hell is he working for?

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