“Audit firms must train their audit and national office professionals not only to recognize red flags, but also to have the resolve to refuse signing off on an audit if there are unresolved material issues,” says Andrew Ceresney, director of the SEC’s Division of Enforcement. “BDO failed to do that here, even though these issues were elevated to the highest levels of its audit practice.”
At the same time, ”company executives and board members have an obligation to tell auditors the complete truth about corporate events and transactions,” says Andrew M. Calamari, regional director of the SEC’s New York office. “We allege that Pence misled auditors and investors while acting as a front man for [others who were] actively scheming to misuse company funds.”