SEC Charges 69 Audit Firms and Partners for Issuing Audit Reports While Not Registered with the PCAOB
FOR IMMEDIATE RELEASE
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.
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Members of the press may contact:
Associate Director, Division of Enforcement, SEC Headquarters
Kenneth D. Israel, Jr.
Regional Director, SEC’s Salt Lake Regional Office
Michele Wein Layne
Associate Regional Director, SEC’s Los Angeles Regional Office