September 26, 2020

Accountants Behaving Badly: PCAOB Fines Australian Firm, Larcenies In Massachusetts, Slammer Time

Plus, a former chartered accountant in India is accused of murder, and a U.K. accountant is jailed for three years for stealing thousands of pounds from car dealership.

PCAOB fines Australian accounting firm $50,000, revokes registration for not following auditing rules too well [PCAOB]
The PCAOB recently revoked the registration of Sydney-based HLB Mann Judd and fined it $50,000 for violating PCAOB rules and auditing standards in connection with the firm’s audits of an issuer client’s financial statements for six fiscal years, as well as violating quality control standards.

The PCAOB also fined auditor Darryl Swindells $15,000 and auditor Aidan Smith $10,000, and barred each for being an associated person of a registered public accounting firm for three years and one year, respectively.

HLB Mann Judd can reapply for PCAOB registration after three years.

And here’s a nice little summary of what HLB Mann Judd, Swindells, and Smith did poorly:

Swindells was the engagement partner who authorized the issuance of the Firm’s first three audit reports on the Issuer A engagement, and who had final responsibility for the audits of Issuer A’s FY 2012 through FY 2016 financial statements. Smith was Swindells’ successor on the engagement, served as the engagement partner who authorized the issuance of the Firm’s fourth audit report on the Issuer A engagement, and had final responsibility for the audit of Issuer A’s FY 2017 financial statements.

When HLB Mann Judd accepted Issuer A as an audit client and performed audits of six years of Issuer A’s financial statements, the Firm was not in a position to adequately audit issuer clients under PCAOB rules and standards. It failed to (i) train its personnel to perform issuer audits in accordance with PCAOB standards and (ii) staff its audits of Issuer A with auditors qualified and knowledgeable to perform issuer audits in accordance with such standards. The Firm also lacked quality control policies and procedures that addressed the requirements of, or otherwise referenced considerations distinctive to, issuer audits. As a result, the Firm violated PCAOB rules, auditing standards, and quality control standards.

Swindells and Smith also violated PCAOB rules and auditing standards in connection with their audits of Issuer A. They did so in connection with three aspects of those audits: client acceptance and continuance; audit planning and performance; and documentation. With respect to audit planning and performance, those deficiencies arose in key areas of the audits: risk assessment for Swindells, and revenue testing and goodwill valuation testing for Swindells and Smith.

Former town accountant accused of stealing more than $729,000 from Uxbridge, Monterey and Millville [MassLive]
Justin Cole, the former accountant for the town of Uxbridge, has been charged with stealing more than $729,000 from multiple municipalities, including more than $650,000 from Uxbridge, Massachusetts Attorney General Maura Healey announced on July 7.

Cole is also accused of stealing $24,597 from Monterey and $47,600 from Millville.

Cole, 38, was indicted by a statewide grand jury on five counts of of larceny over $250, two counts of larceny over $1,200, four counts of false claims, four counts of securing an unwarranted privilege, and a single count of unlawful financial interest of a municipal employee.

Former Newburyport-based accountant charged with larceny, embezzlement [Salem News]
Patricia Lindau, a former Newburyport accountant, was charged with larceny and embezzlement after she shuttered her bookkeeping business, left clients with unpaid taxes, and moved to Maine, according to the district attorney in Essex, MA.

Lindau, 60, who ran payroll services firm Northeast Abacus Inc., was charged with two counts of larceny and two counts of embezzlement by a tax preparer. She is expected to be arraigned July 21.

Authorities launched an investigation after receiving complaints from two former clients of Lindau’s. The complaint alleges that Lindau stole an estimated $60,300 from two small businesses, located in Danvers and Haverhill, when she failed to pay their state taxes.

Lindau and her website disappeared in May, leaving her clients owing back taxes to the state and the IRS, according to several business owners.

Orange County man sentenced to 2½ years in federal prison for embezzling $1.8 million from commercial real estate company [Justice Department]
Duy Duc Nguyen was sentenced recently to 30 months in federal prison for embezzling more than $1.8 million from his employer, Anaheim-based Milan Capital Management, a commercial real estate management company and developer.

Nguyen, 38, was also ordered to pay $1,812,331 to Milan Capital Management. He pleaded guilty to one count of wire fraud last January.

Here’s why the feds are locking Nguyen up:

Milan Capital employed Nguyen as an accounts payable clerk in its accounting department from July 2014 to December 2017. Beginning in January 2015 and continuing until March 2018, Nguyen stole the password of Milan Capital’s treasurer, then used it without permission to alter the bank account and routing information listed in certain vendor accounts in the company’s accounting system, replacing them with his own bank account and routing numbers. As a result, Nguyen fraudulently caused Milan Capital to make payments directly into his bank account while seemingly paying the actual invoices of legitimate vendors.

Nguyen also altered company records and lied to company executives when they asked about vendors’ complaints of non-payment of various invoices. The company ultimately paid the actual vendors in what amounted to a duplicate payment.

After Milan Capital terminated Nguyen in December 2017, he continued to steal money from the company until his scheme to defraud was discovered in March 2018. During this period, Nguyen unlawfully gained entry into Milan Capital’s office by using an improperly retained key and by misusing one or more passwords to gain access to the company’s accounting system and fraudulently cause the company to transmit more money into his bank account.

Other accountants behaving badly:

  • Gujarat: Shunning career as chartered accountant, 25-year-old man indulges in snatching and murder [Times Now]
  • Absa forensic accountant arrested for fraud after alleged theft of R25m [TimesLive]
  • Darwin accountant jailed for dodging ASIC appearance [Accountants Daily]
  • Accountant stole £250,000 from a Sunderland car dealership as his boss needed cash to pay for his wife’s cancer treatment [Sunderland Echo]

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