dog,
Good stuff.
Just in case (ha!) some folks might not want to take the time to click through, the following is from a paper published by a major law firm entitled "SEC Enforcement – What Chief Legal Officers of SEC
Reporting Companies Should be Focused On".
"The auditors have their own duties in the event they discover material fraud in the course of an
audit. They are under duties to report to management and the audit committee. If, after informing the
audit committee, the auditors conclude that the company has not taken “timely and appropriate remedial action” they must report up to the board. Upon receiving such a report, the board has one business day to report to the SEC, failing which the auditors must resign and report, or just report, the matter to the SEC."
Just a couple points.
This interpretation obligates the auditor to define "material fraud".....an issue of law and intent versus "mere" improper accounting. By taking the indicated action by resigning and making the issue a public one they expose themselves to legal recourse by the client, so they need to be extremely certain of their position. They presumably can escape that jeopardy by taking the "or just report" option....it's not clear to me whether, should they choose that option, either the client or the shareholders would ever hear about it. In which case the "fact" that Robison is still in place may not be all that telling.
For the record, in this case once the auditors report to management and the audit committee they have already reported "up to the board".
