SEC Sanctions 5 Accountants for Poor Auditing

Dec 10th 2015
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The US Securities and Exchange Commission (SEC) on Dec. 10 permanently barred one accountant and his firm from practicing on behalf of any public company or other SEC-regulated entity, and suspended four others and another firm for a variety of violations that include deficient audits of public companies, jeopardizing the independence of other audits, falsifying audit documents, and misrepresentation of licensing status.

The accountants consented to the orders without admitting or denying the findings.

“Auditors must follow the professional standards and avoid conflicts of interest when they opine on the financial information reported by public companies,” Paul Levenson, director of the SEC's Boston Regional Office, said in a prepared statement. “These accountants and their firms showed complete disregard for the basic rules of their profession. As a result, they are now barred from working on any SEC-related matters.”

According to a release issued by the SEC, the accountants involved are Peter Messineo and his firm Messineo & Co. in Clearwater, Florida; Charles Klein, president of DKM Certified Public Accountants in Dunedin, Florida; Robin Bigalke, owner of RLB Certified Public Accountant in Gulfport, Florida, who formerly worked for Messineo; Joseph Mohr of Spring Hill, Florida, who formerly worked for Messineo; and Richard Confessore of Sarasota, Florida, who formerly worked for Messineo and now is a director and quality review partner at DKM.

The SEC's orders include the following findings:

  • Messineo and his firm, which had more than 70 corporate clients, failed to perform mandatory quality reviews for their own audits and performed deficient reviews for audits by another audit firm.
  • As Messineo & Co.'s senior accountant, Bigalke covered up those violations by falsifying and backdating audit documents. She also arranged with Mohr, the firm's quality reviewer, the backdating of quality review documents.
  • Mohr falsely identified himself as a CPA at a time when he was unlicensed.
  • Messineo was the CFO of two public companies being audited by Klein and DKM. He falsely certified the companies' public filings even though he knew that auditor independence rules were being violated because Confessore was improperly serving conflicting roles as a member of the DKM audit team and an employee of Messineo & Co.
  • Messineo resigned as CFO from both public companies and merged his firm into DKM. But he retained ownership interests in the two companies while DKM continued to audit them – increasing DKM's independence issues, according to the SEC.

Messineo and his firm Messineo & Co. are permanently barred from practicing as accountants for any public company or other SEC-regulated entity. Klein, Confessore, and DKM are suspended from appearing or practicing before the SEC as accountants for at least two years. Mohr is suspended for at least four years, and Bigalke is suspended for at least three years.

They are collectively paying penalties and disgorgement totaling more than $100,000 to settle the SEC's charges.