SEC Bars Firm from Auditing China Based Companies

The SEC barred Rochester, N.Y.-based EFP Rotenberg LLP from auditing any U.S.-traded companies based in China, according to the Wall Street Journal. This looks to be a first-of-its-kind penalty from the SEC after EFP Rotenberg allegedly mishandled the audit of a Chinese travel company, China’s Universal Travel.

The SEC said in an administrative proceeding that EFP Rotenberg didn’t properly plan its audit, and didn’t obtain enough evidence or show enough professional skepticism when it gave the company’s financial statements a clean bill of health.

EFP Rotenberg also made no attempt to communicate with the audit firm it replaced before accepting Universal Travel as a client, the SEC said, even though the prior firm had raised questions about the company when it resigned as auditor.

According to the SEC, EFP Rotenberg was fined $50,000 in addition to being barred from auditing any companies that is headquartered or has at least 20% of its businesses in China.

“We are pleased to have this issue resolved,” says Thom Englert, EFP Rotenberg’s CEO, in a statement to the Wall Street Journal.