The SEC called for a cease-and-desist hearing regarding Egeberg's actions. Those included his audits of the financial statements of Fox Petroleum for fiscal years 2010, 2011 and 2012 and of those for the fiscal years 2006 through of RPM Advantage, whose SEC registration was revoked in 2011.
For example, Egeberg was unaware that his audit of Fox's 2010 financial statement was a re-audit since the registration of the prior auditor had been revoked by the PCAOB. The SEC says those facts were public and noted the company's Form 10-K was posted on its web site. A similar issue arose with his work for RPM. While Egeberg claimed that when he inquired for information from the prior auditor, that person was unavailable. In fact, the prior auditor had been suspended from practice before the SEC.
In September 2011, Fox hired Egeberg to audit financials for financial years 2009 and 2010 for each two companies it wanted to purchase. Fox's CEO emailed Egeberg, informing him that the internal auditors would be unable to complete the audits within two days, needed to get financing under the purchase agreement. Within 40 hours, Egeberg said he had completed all four audits. The SEC noted "Fox Petroleum's CEO enticed Egeberg to complete the two audits under significant pressure by promising him past-due payment owed for the Fox Petroleum audits, but only if Egeberg could complete the audits in the two-day timeframe".
The SEC said Egeberg could not provide evidence he performed audit work for the two acquisition targets. Also, his only training was having taken four courses relating to audits and audit procedures, at least two of those self-directed online courses. Since he had no training, Egeberg used a check list from the AICPA's Peer Review Program Manual.
As a result of his lack of experience, Egeberg failed to design and plan audit procedures and his audits completely lacked workpapers. In fact, despite his audit work for 20 companies, Egeberg's career had primarily involved preparing tax returns and general ledger bookkeeping for individuals and businesses.Last modified on Friday, 17 January 2014