Auditor Suspicions Lead to Investigation

Those who question the value of independent audits and investigations by certified public accountants and certified fraud examiners may wish to consider a court case recently initiated by the SEC.  On July 6, 2009, the SEC filed a complaint in United States District Court alleging that the former CFO of UCI Medical Affiliates, Inc., a public company based in South Carolina, had embezzled nearly $3 million from the Company.  The Complaint alleges that the embezzlement was conducted utilizing company credit cards, fraudulent expense reports and altered invoices and resulted in fraudulent financial statements and SEC filings.  An internal investigation began in December 2008 when the Company’s independent auditor reported to the Company’s audit committee and raised concerns about certain financial transactions.  The audit committee authorized an investigation by the auditor and that investigation revealed additional irregularities.  As a result, the Company terminated the CFO and reported the internal investigation to the SEC which is now pursuing the matter in the United States District Court.
http://www.sec.gov/litigation/complaints/2009/comp21119.pdf

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