We have repeatedly stated that auditors are significant players in today’s securities industry. No other than the SEC has made this point on numerous occasions. Recently, the SEC brought this fact home with the filing of administrative proceedings against two auditors. See http://www.sec.gov/litigation/admin/2013/34-68605.pdf.
The SEC claimed these individuals failed to follow professional standards in reviewing valuations derived from management. These auditors failed to properly review suspect real estate loans. The SEC said these auditors, basically, “rubber-stamped” the material it received from management. As such, the SEC charged these auditors with several violations of PCAOB standards.
There is no doubt that auditors must improve their reviews regarding valuations or face the SEC’s wrath.