You don't.
That's the point I'm making. Latency in Cubase only applies to MIDI and VST instruments because Cubase automatically adjusts the timing on audio recordings.
The problem this guy is having is a delay with recorded audio, so it's a monitoring problem.

The problem he described is very common one with Cubase because there are several ways to monitor signals through the audio card.

In Cubase 5.1 for instance, there's a choice between Tape Type, Record Enable and Global Disable.
One will give you just the sound monitored from your hard drive and is delayed because of the 'latency' for want of a better word.
One will give you both the sound monitored from the hard drive plus the live signal.
One will give you just the live sound and then stitch back to monitoring from the sound card during playback.

Right now he's got it set up to monitor just the recorded sound whether he's playing live or not. He needs to set it up so that while he's recording, it only monitors his live signal, and when he's playing back it switches back to his hard drive.