Denver-based Levine Hughes & Mithuen settled a Securities and Exchange Commission complaint related to its audit work, paying a $50,000 fine and neither admitting nor denying wrongdoing, the Rocky Mountain News reported.
The firm was accused by the SEC of destroying documents and altering work papers as the SEC investigated Sport-Haley Inc., a client of Levine Hughes & Mithuen, which is ranked as the 19th largest accounting firm in the Denver area.
As part of the settlement, the firm agreed not to practice accounting before the SEC, but it can apply to be reinstated in three years. It cannot, however, audit public companies any longer.
The SEC is suing Denver-based sportswear maker Sport-Haley, alleging the company overstated its inventory in 1998, then tried to minimize the problem by writing off the overstatement over time, rather than recognize the loss all at once, the Rocky Mountain News reported. The SEC also makes allegations about improper recording of expenses and other special charges.
The SEC alleges that Sport-Haley overstated 1998 fiscal year income by $1.5 million, or 41 percent, and its 1999 fiscal year income by $311,000, or 22 percent, the Rocky Mountain News reported.
Levine Hughes & Mithuen partners and staff were accused by the SEC of "improperly altering" its Sport-Haley work papers. The SEC also claimed that says a staff accountant for the firm disposed of Sport-Haley documents that remained in the firm's office after the 1999 audit, among other allegations.
Sport-Haley terminated Levine Hughes & Mithuen in July 2000 and replaced the firm with Denver's Hein & Associates, the Rocky Mountain News reported, adding that Levine Hughes & Mithuen re-signed its two last public-company clients in the last two years.