The Securities and Exchange Commission charged Friedman Friday with improper professional conduct for failing to comply with the standards of the Public Company Accounting Oversight Board while conducting audits of two public companies from 2017 through 2020.
New York City-based Friedman, which
In Friedman's audit of iFresh Inc. for fiscal years 2017 through 2020, according to the SEC's order, the firm failed to design and perform audit procedures that would have detected numerous undisclosed related-party transactions by the Asian-American grocery supermarket chain, which was previously charged by the SEC with repeatedly filing materially inaccurate financial statements that failed to fully disclose related-party transactions.
The charges specifically alleged that iFresh engaged in undisclosed transactions with entities that were either controlled by the CEO of the company or owned by the CEO's brother.
The SEC's recent order against Friedman finds the firm did not exercise professional skepticism during its review of the work papers, specifically failing to recognize indications of undisclosed related parties. The SEC also found Friedman failed to design, implement and monitor an adequate system of quality control, and that it failed to adopt and implement adequate policies and procedures regarding audit documentation.
The order against Friedman finds that it engaged in improper professional conduct within the meaning of Section 4C(a)(2) of the Securities Exchange Act of 1934 and Rule 102(e) of the SEC's Rules of Practice, and violated Section 10A(a)(2) of the Exchange Act and Rule 2-02(b)(1) of Regulation S-X.
Without admitting or denying these SEC findings, Friedman agreed to be censured, implement undertakings concerning the training of its staff, and pay disgorgement of $524,138, pre-judgment interest of $40,574, and a monetary penalty of $1,000,000.
