Deloitte sacked in latest accounting row

Citing "errors" in its previous financial reports, the beleaguered US cable operator Adelphia yesterday sacked its accountants Deloitte & Touche, and restated downwards its 2000 and 2001 financial results.

The announcement, which will add to the swirling doubts about the veracity of financial reporting here, came as jurors in Houston deliberated for a fifth day in the obstruction of justice trial of Andersen, another of the Big Five auditing firms.

In its statement, Adelphia blamed the company's previous management under the founding Rigas family for over aggressive treatment of various costs, including set-top boxes and programming. The company is revising its revenues for 2001 down by 2 per cent to $3.51bn (£2.4bn), and lowering earnings before tax and depreciation by 15 per cent to $1.2bn, and its 2000 figures by slightly less.

But these are only the tip of the iceberg of Adelphia's difficulties, which exploded into the public arena in March when the board disclosed the company had guaranteed more than $3bn of loans to the Rigas family, which stepped down last month. It is already in default on $7bn of bank debt, and must make a $45m interest payment by Saturday to avoid defaulting on three bond issues.

Adelphia, the sixth-largest cable operator in the US, also said it had overstated the total number of its cable subscribers on 31 December by 47,523. The news drove Adelphia shares down 12 cents to close at 18c yesterday.

The Adelphia crisis is the latest of several which have spooked Wall Street and shaken overall investor confidence. Last week Henry Paulson, the chief executive of the investment bank Goldman Sachs, was moved to demand that corporate America put its house in order. "Never in my lifetime" had confidence in US companies fallen to such a low level, Mr Paulson said in a rare public appearance.

The cases include Tyco, Global Crossing, the recently settled conflict of interest investigation into Merrill Lynch, and above all the energy trader Enron, whose bankruptcy on 2 December led directly to the criminal prosecution of Andersen for obstructing justice by destroying Enron audit documents between 23 October and 8 November 2001

According to reports, Adelphia is blaming Deloitte for failing to alert the company's audit committee to the questionable practices of the former board ­ rather as Andersen is accused by Enron shareholders of signing off on the dubious partnerships run by senior Enron executives, in which billions of dollars of debt was kept off balance sheet. Deloitte has said its work for Adelphia "complies with all applicable professional standards".