Former auditors settle with SEC

Three former auditors of a US financial services firm have settled with the
Securities and Exchange Commission, after the regulator charged them with
‘improper professional conduct’.

The charge – of former PwC auditor Press Southworth and former Deloitte
auditors, Robert Harbrecht and Brian Spires – related to their audit work of
receivables securitisation.

The three were cited by the SEC for violating generally accepted auditing
standards (GAAS) and GAAP during their time as auditors for National Century
Financial Enterprises.

The violations also relate to fraud which the auditors failed to detect until
2002, when the company filed for bankruptcy, the Columbus Dispatch reported.

The SEC also alleged that several inaccuracies in the financial reports and
securities disclosure should have led the auditors to question the actions of
the company’s managers. Instead the auditors placed an ‘undue reliance on
management representation’, the SEC said.

Without admitting or denying the charges, the three have agreed to being
barred from practice and holding CEO or CFO positions at public companies.

Further reading:

SEC
faults three auditors

Ex-Auditors
Settle Securitisation Charges