Please ensure Javascript is enabled for purposes of website accessibility

Florida Auditor Busted by SEC For Failure to Rotate

Come ON, man. This isn't even worth getting in trouble for.

The Securities and Exchange Commission today sanctioned a Florida-based auditor for violating federal laws and regulations requiring lead audit partners to periodically rotate off their audit engagements with a publicly traded company in order to preserve the integrity of the financial reporting process. 

The lead partner primarily responsible for the audit of a public company is prohibited from performing lead audit partner services for the same issuer for more than five consecutive fiscal years.  The SEC finds that Eliot Berman attempted to circumvent this auditor rotation requirement.  For the audit of a company that he conducted for the previous five years, Berman installed as lead audit partner an employee at his firm who was not a certified public accountant nor otherwise qualified to lead such an audit.  Berman improperly continued to perform many of the lead audit partner functions for that audit. 

Berman and his firm Berman & Company, located in Boca Raton, agreed to settle the SEC’s charges.  Berman must pay a $15,000 penalty and is suspended for at least one year from practicing as an accountant on behalf of any publicly traded company or other entity regulated by the SEC.

Berman & Company, P.A. is a PCAOB registered firm. They could also use a proofreader, as they spelled "consultants" wrong on their website:

It's unclear just how many qualified auditors Berman has making up the "& Company" but I think it's safe to assume he's the only one. Rather, he was.

Back to the press release:

The case is part of the SEC’s ongoing Operation Broken Gate designed to identify auditors who disregard their gatekeeper roles in violating professional standards and thereby increasing the risk of undetected fraud in financial statements that are not being properly audited.

“When investors receive an audited financial statement, they have a right to expect that the audit was performed by a qualified and independent auditor,” said Paul Levenson, Director of the SEC’s Boston Regional Office.  “Berman attempted to subvert the independence rules by concocting a sham rotation and naming an unqualified employee of the firm to serve as token lead audit partner while he continued to pull the strings.”

WAS IT WORTH IT??

Latest Accounting Jobs--Apply Now:

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

Comments are closed.

Related articles

trash can fire

Former Client Cockblocks the EY Split to Make Sure They Get the $2.7 Billion They’re Suing EY For

While it appears the EY split is going off the rails, despite assurances to the contrary from people who stand to make many millions of dollars from it, one former client — or rather, the client’s administrators as the client burned to the ground three years ago — is not satisfied with letting the drama […]

nuclear blast

WTF Happened at SVB and Should KPMG Auditors Have Seen It Coming?

While the general investing public is asking “where were the auditors?” in regards to the recent collapse of Silicon Valley Bank and Signature Bank, the banks’ auditors are insisting that, having exercised requisite due professional care, their unqualified opinions were based on the information available to them at the time and as such, the firm […]