SEC charges Marcum exec with quality control problems

The Securities and Exchange Commission charged the former national assurance services leader at Marcum LLP with failing to address and remediate a number of deficiencies in the New York-based auditing firm's quality controls.

The SEC and the Public Company Accounting Oversight Board fined the firm $13 million in June for the quality control violations, which mainly involved audits of hundreds of special purpose acquisition companies, or SPACs, and required changes in its quality control system (see story).

The charges announced Tuesday involved Alfonse Gregory Giugliano, a CPA who oversaw quality control at the firm. He and Marcum did not immediately respond to requests for comment. Giuliano, 61, served as national assurance services leaders for over 20 years.

Exponential growth in Marcum's public company practice exposed substantial deficiencies in its quality control functions, according to the SEC's order, and Giugliano was allegedly aware that inspections by the PCAOB and by the firm itself pointed to those deficiencies. However, he didn't do enough to address and remediate the deficiencies, resulting in quality control and audit standard violations, including in areas such as client acceptance, engagement partner supervision and review, audit documentation, and technical consultations. He and the firm did not sufficiently monitor the effectiveness of many of its quality control policies and procedures and, in many areas, didn't adequately communicate them to the staff.

Without admitting or denying the SEC's findings, Giugliano agreed to cease and desist from committing or causing any violations and to pay a $75,000 penalty. He also agreed to a censure and to have no leadership, management, oversight or supervisory position at any registered public accounting firm for three years.