SEC sanctions four accounting firms not registering with the PCAOB
Section 102(a) required the SEC to determine the timing of registration with the PCAOB. The SEC determined on April 25, 2003 that auditors of public companies should register within 180 days from that date.
Three firms were denied the privilege of appearing or practicing before the Commission as public accountants for one year but were give the right to apply for reinstatement. Each of the firms and individuals has agreed to settle with the SEC without admitting or denying the SEC's findings.
The four firms sanctioned are Choi Dow Ian Hong & Lee Accountancy Corporation of Los Angeles, Michael Deutchman, CPA of Melville, NY, Banker and Co. of Costa Mesa, CA, and Jay J. Shapiro, CPA, P.C. of Los Angeles.
According to the SEC, Choi Dow Ian Hong & Lee issued an audit report dated December 2, 2004 in connection with its audit of VALCAPX Acquisition Corp., an SEC-registered company, on which was reported no revenue and no assets for the fiscal years ended June 30, 2002, 2003, and 2004. Ernest E. Dow, CPA was censured and the firm was denied the privilege of practicing as an accountant before the SEC.
The SEC censured Jitendra S. Banker saying that Banker's firm had issued audit reports for three small public companies in 2004. Banker & Co. will be reinstated for practice before the SEC after one year if they register with the PCAOB, are certified with the state, and do not commit any further violations.
The firm of Jay J. Shapiro received $40,800 for conducting an audit of Daleco Resources, Corp. of West Chester PA's 2003 financial statements and for issuing the Daleco audit report on January 12, 2004 on those statements. "Subsequent to the institution of these proceedings," the SEC's report says, "the Firm voluntarily reimbursed Daleco $40,800 in audit fees along with $10,964.72 in interest. In view of the Firm's reimbursement, the Commission deems its request for disgorgement and prejudgment interest satisfied." Shapiro was censured and his firm was denied the privilege of practicing as public accountants before the SEC for one year.
Michael Deutchman was censured but may continue to practice as an independent accountant before the SEC provided he registers with the PCAOB. Deutchman issued an audit report on Cyber Grind, Inc., of Beverly Hill CA, whose common stock does not trade, CFO.com reports, and which reported no assets as of December 31, 2003.