The SEC said that Kamienski left Ernst & Young last April.
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Bednar, the senior partner on an engagement team for an audit of a New York-based client not named by the SEC, maintained an improperly close friendship with the company’s chief financial officer from January 2012 to March 2015, the SEC said.
Ernst & Young, Hartford, Kamienski, and Brehl also consented to the SEC’s order without admitting or denying the findings. EY did not do enough to detect or prevent these partners from getting too close to their clients and compromising their roles as independent auditors’.
In a separate case, former partner Pamela Hartford, who served on another audit team, had a romantic relationship with Robert Brehl-the former chief accounting officer of client Ventas, a real estate investment trust, according to the SEC. EY’s independence procedures did not specifically ask about close personal relationships with clients that could impair the firm’s independence.
The order goes into substantial detail, but in summary, the allegations in the order suggest that the coordinating partner may have taken his remedial “responsibilities” too far: the SEC alleges that the coordinating partner repeatedly violated EY policies “by developing and maintaining a close personal relationship with the CFO and members of the CFO’s family that was inappropriate for an independent auditor”. Visit MarketWatch.com for more information on this news.
It said that two of Kamienski’s colleagues informed him that they were concerned about the possible relationship between Hartford and Brehl, but he approved the release of the Ventas audit report despite the information.
Neither Ernst & Young nor the individuals charged admitted or denied any wrongdoing in settling the charges, the SEC said.
“The individuals at the centre of these matters violated multiple EY policies, hid their conduct and behaved in a way that was antithetical to EY’s global code of conduct, culture, values, policies, and training”, said an EY spokeswoman. It said that in both situations, Ernst & Young ignored red flags that signaled conduct their partners’ inappropriate conduct.
EY agreed to pay $4.975 million in monetary sanctions for the violations involving Bednar, who was himself fined $45,000. The firm agreed to pay $4.366 million in monetary sanctions for these violations, and Hartford and Brehl agreed to pay penalties of $25,000 each. Hartford, Kamienski and Brehl have been suspended from appearing and practicing before the SEC as accountants, which includes not participating in the financial reporting or audits of public companies. Hartford and Kamienski no longer work at Ernst & Young. According to the order, the coordinating partner incurred approximately $109,000 in entertainment-related expenses in connection with the audits of three fiscal years of the issuer.
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In the same statement, Ventas also announced the separation of Robert Brehl from his position as Ventas’s chief accounting officer and controller “in relation to these matters”.
