Dive Brief:
- On Tuesday, The Securities and Exchange Commission (SEC) charged public accounting firm RSM US LLP with violations of the agency's auditor independence rules in connection with more than 100 audit reports it prepared for at least 15 clients.
- The SEC censored and fined the company $950,000.
- The firm indicated it was independent in the reports, but either it or associated entities provided non-audit services to affiliates of its audit clients, the SEC said.
Dive Insight:
"The SEC's auditor independence rules specifically prohibit audit firms from providing certain non-audit services," Carolyn Welshhans, the SEC's associate director of enforcement, said in a statement. "Audit firms must put in place procedures, training, and systems that provide a reasonable assurance of independence, and they must monitor for independence on an ongoing basis."
The company provided corporate secretarial services, payment facilitation, payroll outsourcing, financial information system implementation and bookkeeping to its audit clients, among other prohibited services, the SEC said.
In addition, an employee at an RSM International member firm in Australia served as a board member of an affiliate of an RSM US audit client, which is a relationship the SEC said is prohibited.
Some of RSM US's independence controls were inadequate, resulting in the firm's failure to avoid the prohibited non-audit services and the prohibited employment relationship, the SEC said. The violations occurred in 2014 and 2015, and some remained undetected until at least 2016.
RSM US agreed to engage an independent consultant to evaluate its quality controls.
