The U.S. Securities and Exchange Commission (SEC) announced on Tuesday that it formerly charged a certified public accountant (CPA) with failure to address and rectify numerous gaps in Marcum’s quality control system. Alfonse Gregory Giugliano, former National Assurance Leader at Marcum, allegedly knew about the quality control deficiencies but neglected to manage them.
SEC brings charges against Marcum employee
These charges follow in the wake of the Marcum $10m penalty for standards violations and systemic quality control failures regarding the audit of numerous special purpose acquisition companies (SPACs). As a leading auditor of SPACs, the company experienced an approximately six-fold increase in clients, who allegedly took advantage of the significant quality control gaps.
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Upon review, violations were discovered in roughly 25 to 50% of audits. The now-familiar SPAC boom during 2020 and 2021 caught the SEC’s attention when companies such as Draftkings Inc. and Nikola went public. In June, when this hefty penalty was issued, a Marcum spokesperson released a statement which neither confirmed nor denied the SEC allegations:
We remain committed to maintaining the full confidence of our clients, regulators, and investors.
Giugliano, nor the Marcum representative, commented on the matter. Still, the SEC indicated he agreed to not occupy any leadership role at any registered public accounting firm for at least three years. Additionally, Giugliano will also pay a $75,000 penalty. Carolyn Welshhans, SEC’s associate director of the division of enforcement, stated that:
PCAOB audit and quality control standards are the foundation of the auditor gatekeeping function. This action highlights that those with responsibilities for audit firms’ quality control systems, including national partners, must fulfil these critical obligations.
