SEC Institutes Administrative Proceedings Against Audit Partner
July 13, 2021
File No. 3-20394
July 13, 2021 - The Securities and Exchange Commission today instituted administrative proceedings against Paul L. Chancey, Jr., a Georgia-based certified public accountant and audit partner for Cherry Bekaert, LLP, to determine whether Chancey engaged in improper professional conduct during the audits of the 2015 and 2016 financial statements of MiMedx Group, Inc.
As described in the order, the SEC's Division of Enforcement and Office of the Chief Accountant (OCA) allege that Chancey ignored evidence indicating that sales between MiMedx and one of its largest distributors were made on a consignment basis, and that MiMedx had prematurely recognized revenue for these transactions. According to the allegations, despite this evidence and other red flags, Chancey improperly relied on false representations from MiMedx's management and violated several Public Company Accounting Oversight Board standards, including those requiring him to exercise due professional care and obtain sufficient appropriate audit evidence.
The Enforcement Division and OCA claim that Chancey engaged in improper professional conduct within the meaning of Section 4C(a)(2) of the Securities Exchange Act of 1934 and Rule 102(e)(1)(ii) of the Commission's Rules of Practice, and caused Cherry Bekaert to violate Rule 2-02(b) of Regulation S-X by issuing an inaccurate audit report. The matter involving Chancey will be scheduled for a public hearing before the Commission, which will issue a decision stating whether the Enforcement Division has proven the allegations in the order and what, if any, remedial actions are appropriate.
The SEC's investigation was conducted by Kevin Comeau, Ty Cottrill, and Anne Romero, with assistance from Judy Bizu, of the Denver Regional Office. The case was supervised by Laura Metcalfe. The litigation will be led by Stephen McKenna and Mark Williams and supervised by Gregory Kasper.