SEC Suspends Audit Firm and Partner for Engaging in Improper Professional Conduct
Feb. 6, 2020
File No. 3-18967
Washington, D.C., February 6, 2020 - The Securities and Exchange Commission announced today that Houston-based audit firm, LBB & Associates, Ltd., LLP, and its managing partner, Carlos Lopez, CPA, have agreed to settle charges that they engaged in a pattern of improper professional conduct in their audits of Behavioral Recognition Systems, Inc. (BRS).
The SEC's Order finds that LBB and Lopez, who were initially charged by the SEC in January 2019, failed to comply with certain Public Company Accounting Oversight Board (PCAOB) standards in their 2012 through 2014 audits of BRS, a private company previously charged with fraud by the SEC. Specifically, the Order finds that LBB and Lopez repeatedly failed to comply with the PCAOB audit standards regarding: (i) the identification of related party transactions; and (ii) the audit procedures required when examining known related party transactions despite being aware of numerous red flags indicating that additional audit steps were required.
The SEC's Order finds that LBB and Lopez engaged in improper professional conduct in violation of Section 4C of the Securities Exchange Act of 1934 and Rule 102(e)(1)(ii) of the Commission's Rules of Practice. Without admitting or denying the SEC's findings, LBB and Lopez have agreed to the issuance of an order denying each of them the privilege of appearing or practicing before the Commission as accountants with a right to apply for reinstatement after two years.
The SEC's investigation was conducted by Joseph Griffin and Bertram Braganza and was supervised by Peter Rosario, George Bagnall and Antonia Chion. The litigation was conducted by Nick Margida and John Bowers, and supervised by Stephan Schlegelmilch.