Ceresney Warns Audit Committee Members and Auditors
The SEC’s Director of Enforcement, Andrew Ceresney, recently warned that the Enforcement Division will focus on audit committee members and outside auditors as the gatekeepers of the financial reporting process. Mr. Ceresney, highlighting recent cases against audit committee members, advised, “when an audit committee member learns of information suggesting that company filings are materially inaccurate, it is critical that he or she take concrete steps to learn all relevant facts and cease annual and quarterly filings until he or she is satisfied with the accuracy of future filings.” Mr. Ceresney then criticized the subjects of recent auditor enforcement actions, admonishing audit firms to empower “national office personnel” to “be the bulwark against client pressure” and ensure active monitoring of engagement partners.
OUR TAKE: The SEC wants to leverage all securities markets participants to patrol the markets and the players for wrongdoing. Mr. Ceresney puts audit committees and auditors on notice that failure will bring the Enforcement Division’s wrath.