A former engagement quality review partner at Marcum agreed to pay a $30,000 penalty and be suspended as part of a settlement with the Securities and Exchange Commission (SEC) addressing alleged violations of audit standards in his work at diversified holding company Ault Alliance.
Michael Messina consented to a two-year suspension on appearing and practicing before the SEC as an accountant, the agency announced in an administrative proceeding Monday.
In August, Ault Alliance agreed to pay $700,000 as part of a settlement with the SEC addressing allegations of misleading disclosures and reporting violations.
The details: In its enforcement action against Ault Alliance, the SEC accused the company of failure to disclose interests in related-person transactions, improper recording of purported consulting services, erroneous accounting of investments, and failure to maintain accounting and disclosure controls.
Messina’s alleged violations were observed in the audits of each of Ault Alliance’s financial statements for its fiscal years ended Dec. 31, 2017-20. The SEC, per its order, found Messina did not:
- Properly evaluate significant risks identified by the engagement team and whether the team responded appropriately to those risks;
- Perform his review with due professional care; and
- Appropriately document his review.
“These failings led to substantive audit issues going unaddressed in the areas of goodwill and intangibles, crypto miner property and equipment, and related-party transactions in the [Ault Alliance] audits for fiscal years 2017-20,” said the SEC, which also noted inadequate documentation of audit work by Messina from 2016-20.
Messina willfully aided and abetted and caused Marcum’s violations of Regulation S-X, the SEC said. Though Marcum was not disciplined in the case, the agency cited the $13 million fine it levied against the firm in June for quality control violations.
Messina left Marcum in April. He could not be reached for comment.