The Securities and Exchange Commission’s decision to impose relatively short bars and no financial penalties on the auditors of the College of New Rochelle indicates that the commission takes seriously the work of these disclosure gatekeepers despite their not being complicit in the fraud uncovered in 2019.
The SEC charged two former KPMG auditors on Tuesday and suspended them from practicing for issuing an unmodified audit opinion of the New York college’s 2015 fiscal year financial statements, despite not having completed critical audit steps.
Without admitting or denying the findings auditors Christopher Stanley and Jennifer Stewart agreed to be suspended from appearing or practicing before the SEC as an accountant and can apply for reinstatement after three years and one year, respectively.
“This is a relatively short bar for the SEC, and there is no accompanying financial penalty,” said Kathleen Marcus, shareholder at Stradling law firm and a former SEC enforcement lawyer. “While this sanction is serious for the livelihood and career trajectory of the auditors, it could have been far more severe, which likely means that the SEC believes that the auditors failed in their role as gatekeepers but were not complicit in the financial fraud.”