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SEC Suspends Former BDO Accountants for Improperly “Predating” Audit Work Papers


Washington D.C., Oct. 12, 2018 —

The Securities and Exchange Commission today suspended three former BDO USA LLP accountants for their improper professional conduct during an audit of an exchange-listed insurance company.

According to the SEC’s order, BDO fell behind schedule while conducting its 2013 integrated audit of AmTrust Financial Services Inc. and ultimately failed to complete necessary audit procedures before AmTrust’s deadline to file its annual report with the SEC. To create the appearance that BDO’s audit was in fact complete, the senior manager on the audit engagement, Lev Nagdimov, instructed BDO’s audit team to sign off on all work papers and audit programs regardless of whether its work was finished. Nagdimov further instructed BDO’s audit team to load and sign blank or placeholder work papers in BDO’s electronic files.  Consistent with Nagdimov’s instructions, the audit team improperly “predated” audit documentation by signing blank or incomplete work papers and audit programs. After AmTrust filed its 2013 annual report, the audit team finished its necessary audit procedures and preserved the predated sign-offs in BDO’s electronic files by overwriting existing documentation in the placeholder work papers. BDO was required to produce an earlier snapshot of its work papers from the period when the “predated” documents were in place, pursuant to an SEC request. The SEC identified the audit deficiencies and predated work papers by comparing BDO’s final, archived work papers to the snapshot of the work papers as they existed at the time that BDO released its audit report.

The SEC’s order also found that if BDO’s engagement partner Richard J. Bertuglia and engagement quality review partner John W. Green had properly exercised due professional care, they would have identified these audit deficiencies before they released BDO’s audit report, which provided unqualified opinions on AmTrust’s 2013 financial statements and internal control over financial reporting.  

“Auditors are entrusted with significant responsibility when auditing public companies,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office. “Public accountants who manipulate their files to conceal audit deficiencies represent a serious breach of those professional obligations, and the Commission will impose suspensions to protect investors.”

The SEC’s order finds that Nagdimov, Bertuglia, and Green violated auditing standards established by the Public Company Accounting Oversight Board, and engaged in improper professional conduct within the meaning of Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1)(ii) of the SEC’s Rules of Practice.  Without admitting or denying the findings in the SEC’s order, Nagdimov, Bertuglia, and Green each agreed to be suspended from appearing and practicing before the SEC as accountants, which includes not participating in the financial reporting or audits of public companies.  The SEC’s order permits Nagdimov to apply for reinstatement after five years, Bertuglia to apply for reinstatement after three years, and Green to apply for reinstatement after one year.

The SEC’s investigation was conducted by Christopher W. Ahart, Michelle Lama, Keith J. Hunter, and David R. King and supervised by Eric R. Werner and Jim Etri of the Fort Worth Regional Office. 


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