Cases & Deals

Certified public accountant defends SEC disciplinary proceeding

Clients Certified public accountant

Jones Day represented a certified public accountant in connection with an SEC disciplinary proceeding and a petition for review of the SEC's order. The SEC had brought a disciplinary proceeding against client under SEC Rule of Practice 102(e), 17 C.F.R. § 201.102(e). According to the SEC, client engaged in "improper professional conduct" in connection with an audit he performed in 1999 by failing to collect sufficient evidence that an $83,000 receivable was collectible. Jones Day persuaded an Administrative Law Judge that the SEC's charges had no merit, but the SEC reversed on appeal. In the D.C. Circuit, we argued that the pertinent auditing standards allow auditors to exercise their discretion to determine whether they have collected sufficient evidence to demonstrate that a receivable is collectible. We also argued that client's conduct did not rise to the requisite level of "reckless" or "highly unreasonable" within the meaning of Rule 102(e).

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