In this blog post we explored the almost two-year time lag between an SEC enforcement against a company and a related enforcement against the company’s auditor.  In a pair of more recent cases this time lag is much shorter.  In this August 15, 2023, Accounting and Auditing Enforcement Release, the SEC enumerates a number of material misstatements in the financial statements of Ault Alliance, Inc. (Ault). Issues involved included failure to disclose interests in related person transactions, improper recording of purported consulting services and erroneous accounting for investments.  Ault made multiple restatements.  The Release also asserts that Ault failed to maintain accounting and disclosure controls.

On January 18, 2024, only five months later, the SEC brought an Administrative Proceeding against the company’s auditor.  The case against the auditor is complex, involving Ault and several other engagements.  In addition, it is interesting that this action was brought using the SEC’s internal administrative court processes.  Even with these complexities, the time lag between the company enforcement and the administrative proceeding against the auditor is notably shorter.

As always, your thoughts and comments are welcome!