A Florida CPA has been barred from associating with any firm registered with the Public Company Accounting Oversight Board and his firm's registration has been revoked. Sanctions against
The action stemmed from PCAOB findings regarding Hatfield's audits of the financial statements of two companies in 2003, 2004 and 2005. The sanctions went into effect on July 11 after the Securities and Exchange Commission upheld the PCAOB actions following Hatfield's automatic appeal last year.
The subject of the action included Hatfield's audit of the 2004 and 2005 financial statements, of Epicus, a holding company, whose business was the resale of telecommunication services through a subsidiary. The company filed for Chapter 11 protection in October 2004.
The board found that Hatfield failed to substantiate the existence of millions of dollars in receivables for fiscal 2004 and 2005 and that he and his firm and that he failed to consider the impact of a change in Epicus' revenue recognition policy in 2004.
He was also faulted in the audit of the financial statements of Bidville, a company that planned to open an Internet online auction site as a competitor to eBay. The PCAOB said Hatfield failed to establish whether a private placement Bidville in 2003, which was sold at $10 million less than fair market value, complied with GAAP in establishing the placement's value. The PCAOB also objected to Hatfield's lack of response to a consulting agreement between Bidville and a related company and National Securities Corp. National Securities was able to buy 4 million shares of Bidville stock for $500, but the agreement was not initially disclosed in Bidville's financial statements. Bidville disclosed the agreement in an amended annual report but did not make adjustments to its previously filed financials, although had stated it would. Hatfield issued an unqualified opinion of those reports.
Hatfield resigned as the company's auditor in August 2004 but later accepted an assignment to assist with Bidville's restatement of 2003 results. The PCAOB said Hatfield also did not to confirm the issuance of stock with the transfer agent and even though he had said management was engaged in a stock scam, he accepted management's interpretation of the consulting agreement without testing it.