It’s That Time of Year When the SEC Gets Braggadocious

Now that the SEC is a little more than a month into its new fiscal year, the commission wanted to remind everyone that its enforcement division staff didn’t spend FY 2019 watching porn at work all day long.

Yep, the SEC Division of Enforcement 2019 Annual Report is hot off the press, and in it you can find all sorts of different ways the SEC punished financial ne’er-do-wells, scoundrels, and miscreants this year.

Among the accounting and auditing highlights brought up are:

  • PwC and partner Brandon Sprankle fined for violating auditor independence rules by performing prohibited non-audit services during an audit engagement.
  • Crowe, two partners, and two partners of a now-defunct audit firm fined for their audit failures in connection with a company that went bankrupt after discovery of approximately $100 million in unpaid federal payroll tax liabilities.
  • Three ex-BDO USA accountants suspended for their improper professional conduct during an audit of an exchange-listed insurance company, including improperly “pre-dating” audit workpapers.
  • RSM US fined for violating auditor independence rules in connection with more than 100 audit reports involving at least 15 audit clients.
  • Deloitte Japan fined for violating auditor independence rules for issuing audit reports for an audit client at a time when dozens of its employees maintained bank accounts with the client’s subsidiary.

But the crown jewel of enforcement in FY 2019 was the $50 million fine the SEC gave KPMG in June for not only altering past audit work after receiving stolen information about inspections of the firm that would be conducted by the PCAOB, but for also engaging in other misconduct surrounding audit professional training.

In all, the SEC had 862 enforcement actions, including 526 standalone actions, and $4.3 billion in disgorgement and penalties in 2019. The 862 enforcement actions is the most since the 868 handed out in FY 2016.

The majority of the SEC’s 526 standalone cases involved investment advisory and investment company issues (36%), securities offerings (21%), and accounting and auditing matters (17%).

The 92 accounting and auditing standalone enforcement actions this year is up from FY 2018’s 79.

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