Saturday, May 26, 2018
Business

Government watchdog finds flaws in securities accounting

WASHINGTON — A watchdog agency for the accounting industry says it has found numerous flaws in how some firms audited securities brokerages.

The five-month inspection by the Public Company Accounting Oversight Board, its first such inspection, covered a sample of 23 audits of brokerages done by 10 accounting firms. The inspection found deficiencies in all 23 audits, the board said in a report Monday.

The auditing firms' lapses included a failure to adequately verify how much financial cushion the brokerages held against potential losses and the accuracy of revenue figures the brokerages provided.

The report didn't name the auditing firms or the brokerages whose audits were reviewed. But the brokerages whose audits were inspected are a small slice of the 4,400 or so brokerage firms registered with the Securities and Exchange Commission that serve individual and institutional investors.

The board said its inspection results show that some auditors weren't properly fulfilling their duty to provide an independent check on the brokerages.

"Even with this small group of audits inspected thus far, the results are disturbing," said board member Jeanette Franzel, a former managing director of the Government Accountability Office, the auditing agency for the federal government.

Congress created the oversight board in 2002 to replace the accounting industry's own regulators in response to the wave of business scandals that began with Enron Corp. The board has subpoena power and authority to discipline accountants.

The board has been inspecting accounting firms' audits of public companies since it started operations in 2003. In February, it fined a major accounting firm, Ernst & Young, $2 million for alleged lapses in three audits of Medicis Pharmaceutical Corp.

The financial regulatory law enacted in 2010 expanded the board's authority to include inspecting audits of securities brokerage firms.

Some of the flaws the board revealed Monday relate to brokerages' protection of customer money. For example, some securities brokerages are required to maintain a reserve account for customers' funds. In all 14 audits of brokerages that claimed an exemption from that requirement, the accounting firms didn't properly verify that the brokerages were entitled to the exemption, the inspection found.

The inspection found that one accounting firm failed in two audits to maintain its independence from the brokerage firm it audited, in violation of SEC rules. The firm breached its independence by helping the brokerage prepare the financial statements it audited, the report said.

Comments
An American Airlines passenger was refused beer - so he screamed, fought and spit blood, FBI says

An American Airlines passenger was refused beer - so he screamed, fought and spit blood, FBI says

It began, as so many plane debacles seem to, with strange sounds in the bathroom.They were the noises of Jason Felix, one of the passengers on Wednesday’s American Airlines flight out of Saint Croix, according to a FBI affidavit recounting events lea...
Updated: 11 hours ago
Is the Lightning’s Jeff Vinik the best owner in professional sports?

Is the Lightning’s Jeff Vinik the best owner in professional sports?

Hope of another Stanley Cup has dissolved, and soon the ice will follow. Yet even if sorrow is the price of devotion, the true hockey fans will still buy in when the next season comes around.That concept may not be unique to Tampa Bay, but it does se...
Published: 05/26/18
Five members of 69ers motorcycle gang indicted on federal charges

Five members of 69ers motorcycle gang indicted on federal charges

Last year three members of the 69ers Motorcycle Club gang were implicated in the execution of a rival gang leader in the middle of rush hour traffic in Pasco County.Now those three and two other 69ers members have been indicted on federal charges tha...
Published: 05/25/18
With makeover, ZooTampa at Lowry Park takes a page from the theme parks

With makeover, ZooTampa at Lowry Park takes a page from the theme parks

TAMPA — Behind the construction walls near the carousel at ZooTampa at Lowry Park, hammers, saws and power drills made a racket in the blazing Friday heat. A raft full of 100-pound water jugs took test trips on the new Roaring Springs ride set ...
Published: 05/25/18
U.S. news outlets block European readers over new privacy rules

U.S. news outlets block European readers over new privacy rules

LONDON — U.S. news outlets including The Chicago Tribune, The Los Angeles Times, The Orlando Sentinel and The Arizona Daily Star abruptly blocked access to their websites from Europe on Friday, choosing to black out readers rather than comply with a ...
Published: 05/25/18
Tampa Electric appeals OSHA findings for October accident

Tampa Electric appeals OSHA findings for October accident

TAMPA — Tampa Electric Co. is appealing a recent citation by federal regulators. The Occupational Safety and Health Administration hit the utility with a $76,050 fine and a "serious" violation in April following its investigation into an accident in ...
Published: 05/25/18
Fiat Chrysler recalls 4.8 million cars, warning owners: Don’t use the cruise control

Fiat Chrysler recalls 4.8 million cars, warning owners: Don’t use the cruise control

Associated PressDETROIT — Fiat Chrysler is recalling 4.8 million vehicles in the U.S. because in rare but terrifying circumstances, drivers may not be able to turn off the cruise control. The company is warning owners not to use cruise control until...
Published: 05/25/18
Federal Reserve chairman warns his agency must be free from political pressure

Federal Reserve chairman warns his agency must be free from political pressure

Associated PressFederal Reserve Chairman Jerome Powell warned Friday that the Fed’s independence from political pressure must be respected if it is to succeed in controlling inflation, maximizing employment and regulating the financial system. His re...
Published: 05/25/18
Restaurants like Ford’s Garage use the experience to get you in the door

Restaurants like Ford’s Garage use the experience to get you in the door

Tim Butler’s first car was a Ford Model A pick-up truck — a pearl fawn and cherry red pick-up he got his senior year in high school from his dad, who renovates antique cars. That’s why as Butler waited for a table at the Ford’...
Published: 05/25/18
St. Petersburg man fined $507,513 in penny stock scheme

St. Petersburg man fined $507,513 in penny stock scheme

TAMPA — A St. Petersburg man was fined $507,513 and permanently barred from participating in the offering of a penny stock in a case involving a scheme to manipulate the price of Aureus, a penny stock company incorporated in Nevada, officials said Fr...
Published: 05/25/18