The U.K. arm of audit firm Crowe agreed to pay $750,000 as part of a settlement with the Securities and Exchange Commission (SEC) for alleged professional care and skepticism failures regarding its 2018 audit of music streaming subscription company Akazoo.

Akazoo reached a $38.8 million settlement with the SEC in October 2021 for allegedly defrauding investors out of tens of millions of dollars related to its 2019 special purpose acquisition company merger. That merger was informed by the 2018 audit, which the SEC faulted Crowe U.K. for not conducting in line with Public Company Accounting Oversight Board (PCAOB) standards.

The SEC on Monday also announced settlements with Crowe U.K. Chief Executive Nigel Bostock, the engagement partner for the Akazoo audit, for $25,000, and Matthew Stallabrass, the engagement quality reviewer for the audit, for $10,000 regarding their alleged failures.

The details: Akazoo told investors it had more than 4.6 million paying subscribers and about $120 million in annual revenue as it sought to go public. These numbers were included in its 2018 financials, which Crowe U.K. certified.

In May 2020, following an internal investigation, Akazoo admitted former members of its management team defrauded investors by materially misrepresenting Akazoo’s business, operations, and financial results as part of a multiyear fraud. The company actually had negligible revenue and subscribers, according to the SEC.

“Crowe U.K. overlooked red flags pertaining to [Akazoo’s] music streaming revenue and expenses that should have caused it to show greater skepticism and expand its audit procedures before opining on [Akazoo’s] financial statements,” the SEC said in its order. Issues included the experience level of Akazoo’s audit team, discrepancies in the representation of the company’s revenue model, and deficiencies in audit documentation by Crowe U.K.

Compliance considerations: The engagement team at Crowe U.K. did not properly follow the firm’s policies and procedures, the SEC alleged, while the firm failed to adhere to PCAOB quality control standards.

In addition to paying the fine, Crowe U.K. agreed to voluntarily withdraw its PCAOB registration and to not accept any new clients registered with the SEC, among other disciplinary measures.

Firm response: “We are pleased the claims have been resolved,” said Crowe U.K. in an emailed statement. “Audit quality and its continuous improvement remain a key priority for the firm. We have no further comment at this time.”

Neither the firm, Bostock, nor Stallabrass admitted or denied the SEC’s findings in reaching settlement.