Thought you were having a bad day, even week, not after this post!
The SEC (Securities and Exchange Commission) last week suspended an accountant for conducting a faulty audit of the financial statements of a public company that was committing fraud. The accountant agreed to pay a $25,000 penalty in addition to being permanently suspended from appearing and practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies. It doesn’t end just there…. the accountant in question was also the partner of the New York based firm and they also have been prohibited from accepting new public company clients for one year!
So what happened? The publicly traded company claimed to sell internet services to businesses, however they were charged by the SEC for allegedly engineering a scheme to grossly overstate the company’s revenue through fraudulent sales. Both the firm and accountant failed to obtain sufficient audit evidence over revenue recognition and accounts receivable, in addition to incorrectly identifying related party transactions that contracted other audit evidence.
Director of the SEC’s Chicago regional office said that “Auditors are supposed to act as gatekeepers to protect the integrity of our markets, but both the firm and individual failed to live up to their professional obligations,”.
If there was only a software out there to highlight any issues or concerns right off the bat to eliminate this sort of outcome…hmmmmmm click here 😉