SECURITIES AND EXCHANGE COMMISSION
Securities Exchange Act of 1934
Release No. 45797 / April 22, 2002
Accounting and Auditing Enforcement
Release No. 1545 / April 22, 2002
Administrative Proceeding File No. 3-10762
IN THE MATTER OF MICHAEL R. DROGIN, CPA
The Securities and Exchange Commission announced today that it has instituted public administrative proceedings pursuant to Rule 102(e) of the Commission's Rules of Practice to determine whether Michael R. Drogin, CPA, engaged in improper professional conduct in the performance of his audit of Teltran International Group, Ltd. ("Teltran") for the year ended December 31, 1999. Drogin is a Certified Public Accountant licensed in New York and New Jersey. Drogin is also a partner with the accounting firm Liebman Goldberg & Drogin, LLP which is located in Garden City, New York.
The Division of Enforcement and the Office of the Chief Accountant allege that Drogin failed to comply with professional auditing standards in connection with his audit of Teltran. During 1999, Teltran entered into a contract to acquire Channelnet Limited, a company located in the United Kingdom. The contract was signed on July 15, 1999 and the transaction closed on August 16, 1999. Drogin allowed Teltran to record the acquisition as of June 1, 1999, before Teltran had effective control of Channelnet. The use of the earlier effective date was not in conformity with generally accepted accounting principles and caused Teltran to materially overstate its reported revenues in its June 30 and September 30, 1999 Forms 10-Q and December 31, 1999 Form 10-K.
The staff alleges that Drogin failed to obtain sufficient competent evidence justifying Teltran's consolidation of Channelnet as of June 1, 1999 and that Drogin did not comply with professional auditing standards by failing to: (1) maintain an attitude of professional skepticism; (2) render an accurate audit report; and (3) exercise due professional care.
A hearing will be held before an Administrative Law Judge to determine whether the staff's allegations in the Order Instituting Public Administrative Proceedings are true, to provide Drogin an opportunity to dispute these allegations, and to determine what sanctions, if any, are appropriate.