A California-based accounting firm and two of its partners settled charges with the Securities and Exchange Commission alleging “repeated failures” in conducting custody examinations for two SEC-registered investment advisers.

Farber Hass Hurley (FHH) and its partners Michel Abedian and Michael Hurley did not use proper attestation and compliance standards when conducting surprise examinations of clients, according to the SEC’s order filed Wednesday.

From 2017 through 2020, FHH was retained by two unnamed investment advisory firms to conduct custody exams, with Adviser A requiring FHH to retroactively conduct an exam for 2017 after it failed to obtain one.

“In conducting such examinations, the objectives of the accountant are to obtain reasonable assurance about whether the entity complied with the specified requirements in all material respects and to express an opinion thereon,” the order stated. “To comply with the requirements … accountants should obtain sufficient appropriate evidence to reduce attestation risk to an acceptably low level and thereby enable the accountant to draw reasonable conclusions on which to base the accountant’s opinion.”

Abedian allegedly failed to confirm balances and transactions with custodial clients and to reconcile brokerage confirmations to adviser books and records. He did not “obtain sufficient appropriate evidence to support FHH’s opinion,” according to the order. Additionally, Abedian knew in 2017 and 2018 Adviser A had various internal control and books and records deficiencies but did not consider these deficiencies in designing attestation procedures for future exams of the client, according to the SEC.

Hurley failed to make an objective evaluation of the deficient judgments made by Abedian’s team, the SEC alleged, and should have known Abedian did not perform the confirmation and reconciliation procedures and failed to ensure sufficient procedures were performed.

Further, Hurley was involved in establishing FHH’s quality control policies and responsible for monitoring compliance with the policies, the SEC noted.

Without admitting or denying wrongdoing, FHH agreed to a censure. Abedian and Hurley agreed to be suspended from practicing before the SEC as accountants for two and one years, respectively. Upon reinstatement, both partners will be required to undergo independent reviews.

FHH did not respond to a request for comment.