Investigation Shows SEC Prone to Avoiding Big Four Action

An investigation by The Washington Post has revealed that despite the fact that the Big Four audit the majority of publicly traded companies, the SEC is much more likely to discipline auditors from smaller firms, rather than individuals from the Big Four.

SEC insiders indicate that the large firms remain "difficult targets" for the SEC. Small public accounting firms often lack the legal resources to fight any SEC action, therefore "winning" a case is perceived to be much easier against a small firm than a large one.

A Washington Post examination of the SEC enforcement record shows that in the fiscal year that ended September 30, the SEC brought enforcement actions against only two auditors that it identified were employed by the Big Five firms. In contrast, fifteen individual auditors from smaller firms were the subjects of SEC enforcement actions.

"If it's a small [accounting firm], they slam the hell out of them. If it's a big accounting firm, it's a different equation," a member of the SEC staff told The Washington Post.

In some instances, the SEC sought to take action against a firm for violations, but failed to discipline or hold accountable any individual within the firm for their actions.

"It isn't easy to take on those big boys, but one has to do it because otherwise I think the big boys are encouraged to feel that they can push the SEC around," former SEC commissioner Bevis Longstreth said.

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Already a member? log in here.

Upcoming CPE Webinars

Oct 30Many Excel users have a love-hate relationship with workbook links.
Nov 5Join CPA thought leader and peer reviewer Rob Cameron and learn ways to improve the outcome of your peer reviews while maximizing the value of your engagement workflow.
Nov 12This webcast presents basic principles of revenue recognition, including new ASU 2014-09 for the contract method. Also, CPAs in industries who want a refresher on revenue accounting standards will benefit.
Nov 18In this session Excel expert David Ringstrom, CPA tackles what to do when bad things happen to good spreadsheets.