SEC Bars Auditor for Failing Rotation Requirement
The SEC censured, fined, and barred an auditor from practice before the Commission for failing to comply with the auditor rotation requirements. The SEC charges that the principal of the audit firm appointed an unqualified employee as lead partner and continued to perform lead partner activities even though state and PCAOB rules required him to rotate off after 5 years. The SEC asserts that the replacement partner “had no experience auditing public companies” and was not a CPA. The SEC also claims that the rotating partner continued to review work papers, made staffing decisions, and performed some audit work.
OUR TAKE: The SEC continues its initiative to patrol the gatekeepers to the securities markets. In this case, the Commission takes action for technical violations of the accounting rules even in the absence of allegations of improper financial statements or investor harm.