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‘Enforcement 40’ for 2020
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Join the Securities Litigation and Enforcement Group on LinkedInFTX Collapse Puts Auditors in Crosshairs of Clients, Regulators
A lawsuit against FTX’s auditors highlights potential legal risks the audit firms face for vetting the failed cryptocurrency exchange’s books. Prager Metis CPAs LLC and Armanino LLP were “willfully blind” to a pattern of “racketeering” at FTX, a customer who allegedly lost $20,000 said in a Nov. 23 lawsuit in San Francisco federal court. The […]
SEC Accountant Warns of Heightened Fraud Risk Amid Recession Fears, Market Selloff – WSJ
Wall Street’s top watchdog is warning that the market selloff and fears of a recession could encourage more companies to cook their books, and it is pressuring auditors to catch them. “The current economic environment is subject to significant uncertainties and, historically, that oftentimes leads to heightened fraud risk,” Paul Munter, acting chief accountant at […]
More on SEC, Auditors, and Fraud Risk – Radical Compliance
Let’s state that again more simply. Munter is telling people that even small amounts of fraud that are immaterial in dollar terms could still be material issues that investors would want to know about, because the fraudulent transactions suggest deeper problems in the company’s system of internal controls. So auditors should be more diligent in […]
Accounting’s Big Lie — and How to Fix It
Corporations, big accounting firms, and the federal government have been selling the public a lie. They claim that the financial statements of public companies — including those traded on the stock market — are audited by independent accounting firms. But the audit firms are not independent. They are dependent. The audit firms are chosen and […]
The Auditor’s Responsibility for Fraud Detection
Auditors serve an important gatekeeping and investor protection function by helping to verify that issues are promptly identified and addressed so that the auditor has obtained reasonable assurance about whether financial statements are free of material misstatement, whether due to error or fraud. The value of the audit and the related benefits to investors, including […]
SEC Charges Executives and Director with Lying to Auditors
According to the SEC’s complaint, filed in the United States District Court for the District of Nevada, Thompson, Loveless, and Mylock provided Spyr’s auditors with false and misleading information about an SEC investigation into Spyr’s investment in a biotechnology company. The SEC alleges that the defendants told Spyr’s auditors that they were not aware of […]
SEC Warns Chinese Companies About Risks of Auditor Changes – WSJ
The Securities and Exchange Commission on Tuesday warned Chinese companies not to violate legal and audit requirements as they switch to auditors based in the U.S. to comply with a law that threatens to delist the businesses from American stock exchanges. More than 200 U.S.-listed Chinese companies are in danger of being booted off U.S. […]
SEC Charges CohnReznick LLP and Three Partners with Improper Professional Conduct
The Securities and Exchange Commission today charged audit firm CohnReznick LLP with improper professional conduct on engagements for two clients in 2017. The two clients, Sequential Brands Group, Inc. and Longfin Corp., previously were charged by the SEC for filing fraudulent financial statements prior to their bankruptcies and Nasdaq delisting. The Commission also charged firm […]
Ernst & Young Won a Multimillion-Dollar Audit Spot. Investigators Want to Know Why. – WSJ
A rare criminal investigation into corporate auditing is focused on allegations that bid-rigging helped Ernst & Young LLP win a competition run by Sealed Air Corp., according to people close to the probe. The scrutiny highlights the close ties that often exist between corporate executives and the Big Four audit firms. William Stiehl and Carol […]
Ex-KPMG Director Claimed He Was Fired After Questioning Audit Staffing | National Law Journal
Gregory Andrew, who worked at KPMG for nearly two decades before his January 2018 firing, had argued in proceedings before the U.S. Labor Department that he was terminated in violation of a federal whistleblower protection law. He alleged that in the months leading up to his firing he’d complained about deficiencies in the number and […]