Accounting Oversight Board Punishes New York Firm
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The U.S. accounting oversight board barred New York’s Goldstein & Morris from auditing publicly traded companies, marking the group’s first disciplinary action since it was established in 2003.
The Public Company Accounting Oversight Board said in a statement yesterday that the firm hid information from investigators and gave them false information. It also barred the firm’s managing partner, Edward B. Morris, from the industry.
“The board will not tolerate conduct aimed at thwarting the board’s inspections,” the director of the PCAOB’s enforcement division, Claudius Modesti, said in the statement.
The audit board, a centerpiece of the 2002 Sarbanes-Oxley corporate governance law, has mostly set rules for auditors since it was formed in the wake of Enron Corporation’s bankruptcy. Led by William McDonough, former president of the Federal Reserve Bank of New York, the nonprofit group’s budget has more than doubled in two years, leading to a clash with the Securities and Exchange Commission over funding.
The board, funded by levies on publicly traded companies, also censured two former Goldstein & Morris partners, Alan J. Goldberger and William A. Postelnik. They allegedly participated in the misconduct and reported it. All three men agreed to the disciplinary action without admitting or denying wrongdoing.
The firm’s lawyer, Steven Kobre of Kobre & Kim LLP in New York, declined to comment. Mr. Postelnik’s lawyer, Henry Putzel, said he was “gratified” the PCAOB recognized his client’s cooperation. Goldberger’s lawyer, Daniel Horwitz, didn’t return a phone call seeking comment.
The board said Messrs. Morris, Goldberger, and Postelnik knew the firm had audited two public companies without being properly independent of them. The three men hid that from the board by omitting information in a written response to a request for information by board inspectors, the PCAOB said, without naming the companies involved.
After they learned an inspection was imminent, they backdated certain documents and put them in files to hide the firm’s failure to comply with auditing standards, the board said. Messrs. Goldberger and Postelnik notified the PCAOB of the omissions and lies and both resigned from the firm.
