The Securities and Exchange Commission has charged two Grant Thornton affiliates in India and Australia with violating auditor independence rules based on their activities in the tiny island nation of Mauritius off the east coast of Africa.

The SEC settled administrative proceedings with Grant Thornton India LLP and Grant Thornton Audit Pty Limited in Australia. According to the SEC’s charges, the firms indicated in audit reports that they were independent of their respective audit clients when the clients paid fees to a consulting firm owned by two Grant Thornton partners in Maritius who served as board members for the audit clients. The Grant Thornton partners provided services that are prohibited under auditor independence rules, including controlling bank accounts and having authority to act on the audit clients’ behalf, the SEC says.

The two GT firms failed to follow Grant Thornton International’s compliance control procedures, the SEC says, including failing to obtain confirmation letters from member firms in countries where its audit clients have business operations. One firm also failed to perform required independence relationship checks to assure it did not have any conflicts. The SEC also says Grant Thornton failed to discover the independence violations, stretching back to 2008, until several years after they occurred.

Grant Thornton International confirmed the settlement agreements. "Both firms cooperated fully throughout the investigation, and both have implemented additional processes and procedures to mitigate the risk of future incidences,” the firm said through a spokesman.

The firms did not admit or deny the findings, agreeing to penalties totaling about $290,000. “The integrity of the financial reporting process relies on auditors to preserve and protect the independence of their audits,” said Andrew Ceresney, SEC enforcement director, in a statement. “The two Grant Thornton firms undermined this process by failing to ensure that its audits were free from prohibited non-audit services.”