{"id":2521,"date":"2023-04-06T10:55:16","date_gmt":"2023-04-06T14:55:16","guid":{"rendered":"https:\/\/seci.wpenginepowered.com\/?p=2521"},"modified":"2023-04-06T10:55:21","modified_gmt":"2023-04-06T14:55:21","slug":"company-and-auditor-investigations-each-have-their-own-pace","status":"publish","type":"post","link":"https:\/\/seciblog.pli.edu\/index.php\/company-and-auditor-investigations-each-have-their-own-pace\/","title":{"rendered":"Company and Auditor Investigations Each Have Their Own Pace"},"content":{"rendered":"

Almost two years ago, on July 15, 2021<\/a>, the SEC charged the former CEO and CFO of FTE Networks, Inc<\/a>. with perpetrating a multi-year accounting fraud.\u00a0 The allegations included multiple misstatements, including overstating revenues and concealing the existence of conversion features in notes payable.\u00a0 The SEC also alleged that the former officers stole money from the company.\u00a0 The Department of Justice brought criminal charges.<\/p>\n

In cases like this, the question of where were the auditors invariably arises.\u00a0 In many cases the auditors were as much victims of the fraud as any other parties.\u00a0 Audit procedures designed to find fraud provide \u201creasonable\u201d rather than \u201cabsolute\u201d assurance that fraud will be detected.\u00a0 When the PCAOB and the SEC Enforcement Division investigate these kinds of situations and find that audits were conducted in accordance with Generally Accepted Auditing Standards (GAAS), no action is brought against the auditors and there is no public announcement of any kind.<\/p>\n

In other cases, auditors may not have appropriately designed their audit to detect material fraud or not followed GAAS in other ways.\u00a0 In these cases, there will be public announcements by the PCAOB or the SEC Enforcement Division.<\/p>\n

The FTE case falls into the second of these categories and is an example of how separate cases against companies and their auditors move at different rates.\u00a0 On February 28, 2023, almost two years after the original charges, the SEC instituted public administrative and cease-and-desist proceedings against the company\u2019s auditor.\u00a0 As you can read in the related Accounting and Auditing Enforcement Release<\/a>, the proceedings allege several audit failures.<\/p>\n

This auditor focused enforcement is particularly important as it fits together with the Chief Accountant\u2019s October 2022 Statement<\/a> about the auditors\u2019 responsibilities for fraud detection.\u00a0 You can read more in this blog post<\/a>.<\/p>\n

As always, your thoughts and comments are welcome!<\/p>\n","protected":false},"excerpt":{"rendered":"

Almost two years ago, on July 15, 2021, the SEC charged the former CEO and CFO of FTE Networks, Inc. with perpetrating a multi-year accounting fraud.\u00a0 The allegations included multiple misstatements, including overstating revenues and concealing the existence of conversion features in notes payable.\u00a0 The SEC also alleged that the former officers stole money from … Continue reading Company and Auditor Investigations Each Have Their Own Pace<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[143,242],"tags":[],"coauthors":[154],"class_list":["post-2521","post","type-post","status-publish","format-standard","hentry","category-hot-topic","category-reporting"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/2521","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/comments?post=2521"}],"version-history":[{"count":0,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/2521\/revisions"}],"wp:attachment":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/media?parent=2521"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/categories?post=2521"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/tags?post=2521"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/coauthors?post=2521"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}