Grant Thornton and two partners have agreed to settle charges they ignored red flags in auditing two companies that later faced enforcement actions by the Securities and Exchange Commission. The accounting firm, which admitted wrongdoing, will forfeit about $1.5 million in audit fees plus interest and pay a $3-million penalty. The two partners were barred from SEC practice.An engagement partner in both companies' audits, Melissa Koeppel, agreed to pay a $10,000 penalty and will be barred from practicing before the SEC for at least five years. She did not admit or deny the SEC findings. Mike Robinson, an engagement partner of one of the audits, will pay a $2,500 penalty and be barred for at least two years.
In the case of Broadwind, the SEC said Koeppel relied almost exclusively on management reports that a $58-million impairment charge had not occurred ahead of a Broadwind public offering. That was despite the fact the firm had learned of management's expectation of the impairment.
The SEC said that in the case of the ALC, audit Grant Thornton, Koeppel, and Robinson knew or should have known to more heavily scrutinize the company's occupancy and coverage ratio covenants in a lease pursuant to which ALC operated eight assisted living facilities. They also should have been on alert, the agency said, because ACL claimed to have an agreement with the lessor to meet lease covenants by treating ALC employees and other non-residents as occupants of the facilities.
