SEC documents say Nagdimov instructed the team auditing 2013 financial report for AmTrust to sign-off on all work papers and audit programs whether work was finished or not after they fell 14 weeks behind schedule. Steps were taken to give the appearance audit procedures were competed before the release of the audit report.

Nagdimov was on BDO’s audit engagement team for AmTrust from 2006 until he was fired in November 2014. Bartuglia was the engagement partner responsible for BDO’s audits of AmTrust in 2011 through 2015, including BDO’s integrated audit of AmTrust’s financial statements and ICFR in 2013. Green, was the engagement quality review partner for BDO’s integrated audits of AmTrust’s financial statements and ICFR in 2012 and 2013. He left the firm in August 2016.

Nagdmiov can apply for reinstatement after five years; Bertuglia after three years; Green after one.

The problems started on Dec. 18, 2013 when an unnamed second manager emailed a status report showing the delays causing Bertuglia to add four more auditors to the engagement, including two managers, after the team fell 14 weeks behind schedule.

On Jan. 7, 2014, the SEC subpoenaed copies of the firm’s documents, including prior work papers and audit files related to AmTrust.  On Februry 21, Bertuglia told the audit team to complete a variety of work before the client filed its Form 10-K.  Nagidmov then instructed team members to make sure all ensure all work papers and audit programs were loaded and signed in APT, BDO’s audit software, whether or not it was complete.

A few days later, Nagdimov instructed the team to sign everything including work papers and audit programs. He also told the audit team to load and sign blank or placeholder work papers, if necessary.

On February, Bertuglia and Green noticed several work papers in APT were still incomplete. Bertuglia claims Nagdimov told Bertuglia and Green the audit team had completed work, but technical problems prevented them from uploading updated audit papers. Nagdimov also assured the partners all necessary audit work for the Consolidated Audit was complete, including the three audit areas that Bertuglia instructed the audit team to finish before AmTrust’s Form 10-K filing. 

With the verbal assurances, Bertuglia authorized the release of the audit report and Green provided his concurring approval.

The audit team completed work over next month, overwriting incomplete, predated work papers. Sign-offs in APT were also not updated. Predated placeholder work papers included, certain testing of journal entries, entity-level internal controls, and certain premium revenues.