Two men share securities regulation news

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Securities Regulation Daily, December 10, 2015

Accountants suspended for bad accounting

By R. Jason Howard, J.D.

The SEC has suspended two public accounting firms and five individual CPA’s for, among other violations, deficient audits, violations of the independence rules, falsified and backdated audit documents, and failure to be a licensed or registered CPA. One accountant and his firm were permanently barred, while others were suspended for various periods. The respondents were ordered to pay a total of more than $100,000 in disgorgement and penalties.

Messineo. Peter Messineo is a partner at and majority owner of Messineo & Co., a small Florida-based accounting firm. According to the SEC, Messineo & Co. and Messineo performed deficient audits of public company clients, which caused those clients to file misleading audited financial statements with the Commission. To cover up the deficiencies, employees of Messineo & Co. backdated and falsified its audit documentation. Messineo merged his firm with another firm to form DKM Certified Public Accountants, Inc. in 2012 (In the Matter of Peter Messineo, CPA, Release No. 34-76607, December 10, 2015).

Prior to the merger, Messineo had been the CFO of two of DKM’s clients and concurrently the employer of a partner on DKM’s audit engagement team. After the merger, Messineo was a shareholder of two of DKM’s clients and DKM was auditing Messineo’s work. Messineo also failed to timely file with the Commission Forms 3, 4, or 5 and Schedule 13Ds detailing his beneficial ownership of stock in these audit clients.

As a result, Messineo & Co. and Messineo violated auditing standards and independence rules, caused issuers to file misstatements, and failed to disclose his beneficial ownership. In addition, Messineo falsely certified annual and quarterly reports as chief financial officer of two issuers.

DKM. DKM is a small Florida-based accounting firm. It has performed audits of public companies whose stock is registered with the Commission and who file audited financial statements with the Commission. Charles U. Klein, CPA, is a partner at and part owner of DKM (In the Matter of DKM Certified Public Accountants, Release No. 34-76608, December 10, 2015).

In 2012 – 2013, DKM and Klein audited and reviewed the annual and quarterly financial statements of two issuers in which Klein was lead engagement partner and Richard Confessore was the engagement quality reviewer. During that time, Klein caused DKM to not be independent of the two issuers because of business, employment, and financial relationships involving DKM and its clients.

Confessore. As alleged by the SEC, Richard Confessore, CPA, violated the auditor independence rules for seven audit and review engagements of three public company clients in 2012-2013 on account of employment, business, or financial relationships either he or his partners had with those three clients (In the Matter of Richard Confessore, CPA, Release No. 34-76609, December 10, 2015).

In 2012, Confessore was the engagement quality review partner for DKM’s audits or interim reviews of annual and quarterly financial statements of the two issuers in question. At the same time he performed this work, he worked for Messineo, the CFO of the two issuers.

Near the end of 2012, Messineo resigned as CFO of the two issuers and became a shareholder and partner at DKM but Confessore continued to conduct engagement quality reviews of financial statements of the two issuers for DKM in 2013 even though: (1) the companies’ former CFO was now his partner at DKM and in a position to influence the audits and reviews, and (2) Messineo had been CFO during the audit periods covered by his review.

Bigalke. Robin L. Bigalke, CPA, falsified and backdated audit documents in an attempt to hide improprieties and documentation deficiencies at the audit firm Peter Messineo, CPA, according to the SEC (In the Matter of Robin L. Bigalke, Release No. 34-76610, December 10, 2015).

In completing various audit checklist and forms in 2012 for two issuers, Bigalke signed Peter Messineo’s name and initials on his behalf. By signing Messineo’s name, she represented that the engagement quality review (EQR) was adequately performed, timely, and that the audit files contained documentation of the EQRs. Those representations were false as no one had actually performed the EQR’s for those issuers.

Mohr. From 2009 to 2012, Joseph Mohr performed engagement quality reviews in Florida for audits and interim reviews of public companies conducted by Messineo & Co., CPAs, LLC (In the Matter of Joseph E. Mohr, CPA, Release No. 34-76611, December 10, 2015).

At the time Mohr performed this work, he was not a licensed or registered CPA in Florida or in any state because he failed to renew his Illinois registration in 2009. Despite his lack of credentials, Mohr advertised himself as a CPA and used the abbreviation in his title and on his professional papers. Without a CPA license or registration, Mohr used the CPA abbreviation in violation of Florida law.

Penalties. Messineo & Messineo & Co, CPAs, were ordered to pay civil penalties of $25,000; both are denied the privilege of appearing or practicing before the Commission as accountants.

DKM and Klein were ordered to jointly and severally pay disgorgement, which represents profits gained as a result of the conduct described herein of $33,000, prejudgment interest of $2,043.87, and a civil money penalty in the amount of $25,000 to the Securities and Exchange Commission; Klein was denied the privilege of appearing or practicing before the Commission as an accountant for two years.

Confessore was ordered to pay a civil money penalty in the amount of $15,000 and denied the privilege of appearing or practicing before the Commission as an accountant for two years. Bigalke was denied the privilege of appearing or practicing before the Commission as an accountant for three years. Mohr was denied the privilege of appearing or practicing before the Commission as an accountant for four years.

The releases are Nos. 76607 (Messineo)76608 (DMK)76609 (Confessore)76610 (Bigalke)76611(Mohr).

MainStory: TopStory AccountingAuditing Enforcement FraudManipulation SECNewsSpeeches FloridaNews IllinoisNews

Back to Top

Securities Regulation Daily

Introducing Wolters Kluwer Securities Regulation Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.

A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.