SEC Press press_release 13 KB 6,648 chars

Press Release: SEC Charges 69 Audit Firms and Partners for Issuing Audit Reports While Not Registered with the PCAOB (Press Release No. 2007-183; September 13, 2007)

Release
2007-183
Caption
Securities and Exchange Commission v. 37 Unregistered Audit Firms and 32 Audit Partners, et al.
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summary

The SEC charged 69 unregistered audit firms and partners for issuing 60 audit reports for 53 public companies between 2003 and 2005, violating Sarbanes-Oxley’s PCAOB registration requirement, with 51 settling via cease-and-desist orders and fee returns, while 19 contested charges faced potential censure or practice bans.

paragraph

The SEC charged 69 audit firms and partners for issuing 60 audit reports on public company financial statements between November 2003 and October 2005 without being registered with the PCAOB, in violation of Section 102(a) of the Sarbanes-Oxley Act. Of these, 37 firms and 32 partners were named, with 29 firms and 22 partners settling by consenting to cease-and-desist orders, being censured, and in two cases disgorging audit fees—others returned fees during the investigation. Ten firms and ten partners contested the charges, facing potential penalties including denial of the right to practice before the SEC, censure, and possible disgorgement, with remedial outcomes still pending.

narrative

The SEC charged 69 audit firms and partners for issuing 60 audit reports on the financial statements of 53 public companies between November 2003 and October 2005 while unregistered with the Public Company Accounting Oversight Board, in direct violation of Section 102(a) of the Sarbanes-Oxley Act. The enforcement action included 37 unregistered firms and 32 individual partners, with 29 firms and 22 partners agreeing to settle by consenting to cease-and-desist orders, accepting censure, and, in two cases, disgorging audit fees—while the remaining settling parties returned fees to issuers during the SEC’s investigation. Separately, ten firms and ten partners contested the charges, triggering formal proceedings to determine whether they lacked the requisite qualifications to practice before the SEC and whether they willfully violated the law. The SEC emphasized that failure to register with the PCAOB undermined Congress’s intent to ensure auditor accountability and investor protection by evading mandatory oversight. No criminal charges were filed, but the SEC pursued administrative remedies to deter future noncompliance and reinforce regulatory boundaries. Remedial outcomes for the nonsettling parties—including potential denials of practice rights, censure, or disgorgement—remained pending at the time of the announcement. The action underscored the Commission’s commitment to enforcing the foundational audit registration framework established by Sarbanes-Oxley, even against smaller firms and individual practitioners.

Enriched metadata

Scheme
unregistered-securities (100%)
Outcome
settled
Classified unregistered-securities(confidence 100%). EDGAR detection: forms Form D/S-1· recall 41% / precision 30%. detection rule →
Statutes
Section 4C(a) of the Securities Exchange Act
Parties
37 unregistered audit firms and 32 audit partners69 audit firms and partners69 firms and partnersfirms and partnerslinda chatman thomsensettling firms and partnerstwenty-eight firms and 22 partners
Keywords
cpafirmsfirms partnersauditaudit reportspartnersordersorderregistered pcaobsecreportscommissionaudit firmsissuing auditpcaob

Exhibits & Attached Documents (49)

Extracted insights

Entities 7
  • company 37 unregistered audit firms and 32 audit partners
  • company 69 audit firms and partners
  • company 69 firms and partners
  • company firms and partners
  • person linda chatman thomsen
  • company settling firms and partners
  • company twenty-eight firms and 22 partners
Triples 17
  • Sec Charge 69 Audit Firms and Partners
  • Sec Name 37 Unregistered Audit Firms and 32 Audit Partners
  • Firms and Partners Fail to Comply Fundamental Requirement of the Sarbanes-Oxley Act
  • Sec Issue 29 Settled and Ten Contested Orders
  • 69 Firms and Partners Issue 60 Audit Reports for 53 Companies
  • Linda Chatman Thomsen Say Commission is Committed to Ensuring Compliance with the Regulatory Framework
  • Auditors Fail to Register Pcaob
  • Actions Protect Investors and Deter Future Violations of Sarbanes-Oxley’s Registration Provision
  • Twenty-eight Firms and 22 Partners Agree to Settlements Commission Found Each Audit Firm Issued Between One and Eight Audit Reports While Unregistered
  • Firms and Partners Cease and Desist Committing or Causing Violations of the Registration Provision of Sarbanes-Oxley
  • Commission Censure Firms
  • Two Firms Agree to Disgorge Audit Fees They Received for Their Audits
  • Other Settling Firms Return Fees To Their Issuers During the Course of the Commission’s Investigation
  • Settling Firms and Partners Consent to Entry of Order Finding That They Violated Section 102(a) of the Sarbanes-Oxley Act
  • Firms and Partners Who Settled Be Named in Following 29 Settled Orders
  • Commission Issue Ten Orders Instituting Proceedings Against Nine Nonsettling Firms and Ten Nonsettling Partners
  • Orders Allege Firms and Partners Prepared and Issued Audit Reports That Issuers Included in Filings with the Commission
PDF (from attached: pdf)
In re Andrew M. Smith · Source
Text layers
Extracted body text (6,648c) 
SEC Charges 69 Audit Firms and Partners for Issuing Audit Reports While Not Registered with the PCAOB FOR IMMEDIATE RELEASE 2007-183 Washington, D.C., Sept. 13, 2007 — The Securities and Exchange Commission today charged 69 auditors with issuing audit reports on the financial statements of public companies while they were not registered with the Public Company Accounting Oversight Board. The SEC administrative orders name 37 unregistered audit firms and 32 audit partners who participated in the preparation and issuance of their unregistered firms’ audit reports. These firms and partners did not comply with a fundamental requirement of the Sarbanes-Oxley Act of 2002 — that accounting firms that prepare and issue audit reports on the financial statements of public companies must be registered with the PCAOB. The SEC issued 29 settled and ten contested orders. The 69 firms and partners named in today’s actions were collectively responsible for issuing 60 audit reports for 53 companies between November 2003 and October 2005. Linda Chatman Thomsen, Director of the SEC’s Enforcement Division, said, “The Commission is committed to ensuring compliance with the regulatory framework Congress established for auditors of public companies. When these auditors failed to register with the PCAOB, they violated one of the key requirements of Sarbanes-Oxley and evaded the PCAOB’s oversight authority. The actions we take today protect investors and will deter future violations of Sarbanes-Oxley’s registration provision.” Twenty-eight firms and 22 partners agreed to settlements in which the Commission found that each audit firm issued between one and eight audit reports while unregistered, and ordered the firms and partners to cease and desist from committing or causing violations of the registration provision of Sarbanes-Oxley, Section 102(a). The Commission also censured the firms. Additionally, two firms agreed to disgorge audit fees they received for their audits, while the other settling firms that received audit fees returned the fees to their issuers during the course of the Commission’s investigation. Without admitting or denying the findings of the Orders, each of the settling firms and partners consented to the entry of an order finding that they violated Section 102(a) of the Sarbanes-Oxley Act. The firms and partners who settled the proceedings are named in the following 29 settled Orders. Andrew M. Smith, CPA Beckman Kirkland & Whitney; James M. Kirkland, CPA and Robert J. Whitney, CPA Berger, Apple & Associates, Ltd.; Mitchell S. Seifert, CPA Beutel Accountancy Corporation; Todd W. Beutel, CPA Bray & Associates CPAs, LLC; Arnold D. Bray, CPA Bruce Redlin, CPA Bujan & Associates, Ltd.; Frank Bujan, CPA Charles J. Birnberg, CPA Charles R. Hunt, CPA, PA; Charles R. Hunt, CPA Dan Clasby & Company; Daniel E. Clasby, CPA Darilek, Butler & Co., P.C.; Robert F. Darilek, CPA David M. Winings, CPA, An Accountancy Corporation; David M. Winings, CPA Forbush & Associates; Daniel J. Forbush, CPA F.X. Duffy & Co., Inc.; Kevin P. Duffy, CPA Harvey S. Weingard, CPA Henry L. Creel Co., Inc.; Henry L. Creel, CPA Henry Schiffer, CPA, An Accountancy Corporation; Henry Schiffer, CPA Isaac Gordon, CPA Joseph Mao, CPA McNeal, Williamson & Co.; Daniel L. Williamson, CPA Michael C. Lingerman, CPA (partner of firm since dissolved) Milner and Brock, CPA's; Stephen D. Milner, CPA Norman Stumacher, CPA Preferred Accounting Services, Inc.; Ana Costales, CPA Randy Simpson, CPA, P.C.; Randy R. Simpson, CPA Reed & Taylor, CPAs, P.C.; Robert E. Reed, CPA Sanford H. Feibusch, CPA, PC; Sanford H. Feibusch, CPA United Financial CPA PC; Anowar Hossain, CPA William E. Costello, CPA Separately, the Commission issued ten Orders instituting proceedings against a total of nine nonsettling firms and ten nonsettling partners. The Orders allege that the firms and partners prepared and issued audit reports that issuers included in filings with the Commission. The Orders allege that the firms were not registered with the PCAOB. As to all of the nonsettling audit firms, the Orders instituting proceedings will determine whether, pursuant to Section 4C(a) of the Securities Exchange Act of 1934 and Rule 102(e)(1) of the Commission’s Rules of Practice, the firms failed to possess the requisite qualifications to represent others and willfully violated Section 102(a) of Sarbanes-Oxley. As to all of the nonsettling partners, the Orders will determine whether the partners failed to possess the requisite qualifications to represent others by participating in the preparation and issuance of audit reports by a firm that was not registered with the PCAOB. All of the proceedings against the nonsettling firms and partners will determine what remedial relief, if any, is appropriate, including whether they should be censured or denied the privilege of appearing or practicing before the Commission as accountants. The nonsettling firms and partners named in the ten Orders are Banker & Co.; Jitendra S. Banker (see also Order) Carl S. Sanko, CPA (see also Order) Choi Dow Ian Hong & Lee Accountancy Corporation; Ernest E. Dow, CPA (see also Order) Frederick A. Kaden & Co.; Frederick A. Kaden, CPA (see also Order) Schuhalter Coughlin & Suozzo PC; Edward J. Suozzo, CPA (see also Order) Story & Company, P.C.; Brian L. Story, CPA (see also Order) Halt, Buzas & Powell, Ltd.; Wayne A. Powell, CPA and Steven R. Halt, CPA (see also Order) Jay J. Shapiro, CPA, P.C.; Jay J. Shapiro, CPA (see also Order) Michael Deutchman, CPA (see also Order) Richard E. Sellers, CPA and Lester Rex Andersen, CPA (see also Order) In addition, as to three of the above nonsettling firms and three of the above nonsettling partners — Halt, Buzas & Powell, Ltd.; Jay J. Shapiro, CPA, P.C.; Jay J. Shapiro, CPA; Michael Deutchman, CPA; Lester Rex Andersen, CPA; and Richard E. Sellers, CPA — the Orders also institute cease-and-desist proceedings to determine whether a cease-and-desist order should issue against each of them and whether each of them, with the exception of Michael Deutchman, CPA, should be ordered to pay disgorgement of audit fees. The Commission appreciates the cooperation of the Public Company Accounting Oversight Board. # # # Members of the press may contact: Christopher Conte Associate Director, Division of Enforcement, SEC Headquarters (202) 551-4834 Kenneth D. Israel, Jr. Regional Director, SEC’s Salt Lake Regional Office 801-524-6745 Michele Wein Layne Associate Regional Director, SEC’s Los Angeles Regional Office 323-965-3850 http://www.sec.gov/news/press/2007/2007-183.htm Home | Previous Page Modified: 09/13/2007
OCR text (6,648c · plain-text · 99% conf) 
SEC Charges 69 Audit Firms and Partners for Issuing Audit Reports While Not Registered with the PCAOB FOR IMMEDIATE RELEASE 2007-183 Washington, D.C., Sept. 13, 2007 — The Securities and Exchange Commission today charged 69 auditors with issuing audit reports on the financial statements of public companies while they were not registered with the Public Company Accounting Oversight Board. The SEC administrative orders name 37 unregistered audit firms and 32 audit partners who participated in the preparation and issuance of their unregistered firms’ audit reports. These firms and partners did not comply with a fundamental requirement of the Sarbanes-Oxley Act of 2002 — that accounting firms that prepare and issue audit reports on the financial statements of public companies must be registered with the PCAOB. The SEC issued 29 settled and ten contested orders. The 69 firms and partners named in today’s actions were collectively responsible for issuing 60 audit reports for 53 companies between November 2003 and October 2005. Linda Chatman Thomsen, Director of the SEC’s Enforcement Division, said, “The Commission is committed to ensuring compliance with the regulatory framework Congress established for auditors of public companies. When these auditors failed to register with the PCAOB, they violated one of the key requirements of Sarbanes-Oxley and evaded the PCAOB’s oversight authority. The actions we take today protect investors and will deter future violations of Sarbanes-Oxley’s registration provision.” Twenty-eight firms and 22 partners agreed to settlements in which the Commission found that each audit firm issued between one and eight audit reports while unregistered, and ordered the firms and partners to cease and desist from committing or causing violations of the registration provision of Sarbanes-Oxley, Section 102(a). The Commission also censured the firms. Additionally, two firms agreed to disgorge audit fees they received for their audits, while the other settling firms that received audit fees returned the fees to their issuers during the course of the Commission’s investigation. Without admitting or denying the findings of the Orders, each of the settling firms and partners consented to the entry of an order finding that they violated Section 102(a) of the Sarbanes-Oxley Act. The firms and partners who settled the proceedings are named in the following 29 settled Orders. Andrew M. Smith, CPA Beckman Kirkland & Whitney; James M. Kirkland, CPA and Robert J. Whitney, CPA Berger, Apple & Associates, Ltd.; Mitchell S. Seifert, CPA Beutel Accountancy Corporation; Todd W. Beutel, CPA Bray & Associates CPAs, LLC; Arnold D. Bray, CPA Bruce Redlin, CPA Bujan & Associates, Ltd.; Frank Bujan, CPA Charles J. Birnberg, CPA Charles R. Hunt, CPA, PA; Charles R. Hunt, CPA Dan Clasby & Company; Daniel E. Clasby, CPA Darilek, Butler & Co., P.C.; Robert F. Darilek, CPA David M. Winings, CPA, An Accountancy Corporation; David M. Winings, CPA Forbush & Associates; Daniel J. Forbush, CPA F.X. Duffy & Co., Inc.; Kevin P. Duffy, CPA Harvey S. Weingard, CPA Henry L. Creel Co., Inc.; Henry L. Creel, CPA Henry Schiffer, CPA, An Accountancy Corporation; Henry Schiffer, CPA Isaac Gordon, CPA Joseph Mao, CPA McNeal, Williamson & Co.; Daniel L. Williamson, CPA Michael C. Lingerman, CPA (partner of firm since dissolved) Milner and Brock, CPA's; Stephen D. Milner, CPA Norman Stumacher, CPA Preferred Accounting Services, Inc.; Ana Costales, CPA Randy Simpson, CPA, P.C.; Randy R. Simpson, CPA Reed & Taylor, CPAs, P.C.; Robert E. Reed, CPA Sanford H. Feibusch, CPA, PC; Sanford H. Feibusch, CPA United Financial CPA PC; Anowar Hossain, CPA William E. Costello, CPA Separately, the Commission issued ten Orders instituting proceedings against a total of nine nonsettling firms and ten nonsettling partners. The Orders allege that the firms and partners prepared and issued audit reports that issuers included in filings with the Commission. The Orders allege that the firms were not registered with the PCAOB. As to all of the nonsettling audit firms, the Orders instituting proceedings will determine whether, pursuant to Section 4C(a) of the Securities Exchange Act of 1934 and Rule 102(e)(1) of the Commission’s Rules of Practice, the firms failed to possess the requisite qualifications to represent others and willfully violated Section 102(a) of Sarbanes-Oxley. As to all of the nonsettling partners, the Orders will determine whether the partners failed to possess the requisite qualifications to represent others by participating in the preparation and issuance of audit reports by a firm that was not registered with the PCAOB. All of the proceedings against the nonsettling firms and partners will determine what remedial relief, if any, is appropriate, including whether they should be censured or denied the privilege of appearing or practicing before the Commission as accountants. The nonsettling firms and partners named in the ten Orders are Banker & Co.; Jitendra S. Banker (see also Order) Carl S. Sanko, CPA (see also Order) Choi Dow Ian Hong & Lee Accountancy Corporation; Ernest E. Dow, CPA (see also Order) Frederick A. Kaden & Co.; Frederick A. Kaden, CPA (see also Order) Schuhalter Coughlin & Suozzo PC; Edward J. Suozzo, CPA (see also Order) Story & Company, P.C.; Brian L. Story, CPA (see also Order) Halt, Buzas & Powell, Ltd.; Wayne A. Powell, CPA and Steven R. Halt, CPA (see also Order) Jay J. Shapiro, CPA, P.C.; Jay J. Shapiro, CPA (see also Order) Michael Deutchman, CPA (see also Order) Richard E. Sellers, CPA and Lester Rex Andersen, CPA (see also Order) In addition, as to three of the above nonsettling firms and three of the above nonsettling partners — Halt, Buzas & Powell, Ltd.; Jay J. Shapiro, CPA, P.C.; Jay J. Shapiro, CPA; Michael Deutchman, CPA; Lester Rex Andersen, CPA; and Richard E. Sellers, CPA — the Orders also institute cease-and-desist proceedings to determine whether a cease-and-desist order should issue against each of them and whether each of them, with the exception of Michael Deutchman, CPA, should be ordered to pay disgorgement of audit fees. The Commission appreciates the cooperation of the Public Company Accounting Oversight Board. # # # Members of the press may contact: Christopher Conte Associate Director, Division of Enforcement, SEC Headquarters (202) 551-4834 Kenneth D. Israel, Jr. Regional Director, SEC’s Salt Lake Regional Office 801-524-6745 Michele Wein Layne Associate Regional Director, SEC’s Los Angeles Regional Office 323-965-3850 http://www.sec.gov/news/press/2007/2007-183.htm Home | Previous Page Modified: 09/13/2007

Related documents (49)