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Deloitte LLP

Just For Feet, Inc. Audit

Date: 04/26/2005 (Date of Settlement Announcement)

Misconduct Type: Securities

Enforcement Agency: SEC

Contracting Party: None

Court Type: Administrative

Amount: $375,000

Disposition: Settlement

Synopsis: The U.S. Securities and Exchange Commission (SEC) issued an order instituting public administrative proceedings against Deloitte & Touche LLP based on its failed audit in 1999 of the fiscal 1998 financial statements of Just for Feet, Inc., a now-defunct shoe and sports apparel retailer, for which the firm received audit fees of approximately $361,000. The engagement partner, Steven H. Barry, and the audit manager, Karen T. Baker, were also charged. The SEC found that Just for Feet falsified its financial statements, and that Deloitte, Barry and Baker reasonably should have known that Just for Feet's 1998 financial statements had not been prepared in accordance with generally accepted accounting principles. The SEC also found that Deloitte, Barry and Baker did not comply with generally accepted auditing standards in the conduct of their audit and engaged in improper professional conduct. Without admitting or denying the SEC’s findings, Deloitte agreed to accept a censure and pay $375,000 to settle the charges, while Barry and Baker each consented to a temporary denial of the privilege of appearing or practicing before the SEC as an accountant.