AUDITORS BEWARE!!! SEC IS ON THE PROWL
The SEC Enforcement Division’s chief accountant has gone on record as saying that, in every SEC accounting case, the SEC Staff reviews auditor conduct.
The chief accountant stated that the SEC Staff looks at improper revenue recognition; understated expenses; financial crisis related accounting issues regarding loans and securities; as well as cross-boarder issues. These reviews are done in conjunction with the PCAOB, and said auditor reviews are ongoing.
This is not new news or should not come as a shock to anyone. The SEC is always looking at the potential for bringing an auditor into an action when there is an investigation of any form of financial fraud. As a result, auditors should respond carefully to any SEC inquiry.