Audit Firm Admits Wrongdoing and will Pay $2.1 Million to Settle SEC Charges
A large audit firm agreed to pay over $2.1 Million and admit wrongdoing in connection with failing to adhere to professional standards. Five audit professionals at the firm were also suspended and fined. The SEC charges that the firm issued unqualified audit opinions even though it had knowledge of significant red flags about an unverified cash investment that represented approximately half of the company’s assets. The company was controlled by a previously convicted felon that operated through corporate officers that he paid and directed.
OUR TAKE: The SEC continues to prosecute securities markets gatekeepers such as auditors when market participants engage in fraud. We recommend heightened due diligence before accepting client engagements.