SEC Charges Audit Firm and Suspends Accountants for Deficient Audits

The Securities and Exchange Commission today filed settled charges against national audit firm Crowe LLP, two of its partners, and two partners of a now-defunct audit firm for their significant failures in audits of Corporate Resource Services Inc., which went bankrupt in 2015 after the discovery of approximately $100 million in unpaid federal payroll tax liabilities. The SEC's order against Crowe finds that its audit team identified pervasive fraud risks in connection with its 2013 audit of Corporate Resource Services yet failed to: Include procedures designed to detect the company's undisclosed payroll tax obligations; Properly identify and audit the company's related-party transactions; Obtain sufficient appropriate audit evidence to respond to these fraud risks, support recognition of revenue, and otherwise support the audit opinion; Evaluate substantial doubt about the company's ability to continue as a going concern; and Conduct a proper engagement quality review.