SEC Charges National Office Partner at Marcum for Causing Widespread Quality Control Deficiencies
The Securities and Exchange Commission today charged Alfonse Gregory Giugliano, CPA, the former National Assurance Services Leader at Marcum LLP, a public accounting firm, with failing to sufficiently address and remediate numerous deficiencies in Marcum’s quality control system. The SEC previously charged Marcum for these quality control deficiencies and other violations, many of which were in connection with Marcum’s audit work for hundreds of special purpose acquisition companies (SPACs).
According to the SEC’s order, Giugliano oversaw quality control for Marcum’s public company practice, including the firm’s relevant quality control policies, procedures, and monitoring, and directly or indirectly supervised all personnel working within Marcum’s quality control functions. The SEC’s order finds that exponential growth in Marcum’s public company practice exposed substantial deficiencies in these functions. Moreover, according to the SEC’s order, Giugliano was aware that inspections by the Public Company Accounting Oversight Board (PCAOB) and by Marcum itself revealed numerous deficiencies in Marcum’s quality control system. The SEC’s order finds that Giugliano did not sufficiently address and remediate these deficiencies, leading to quality control and audit standard violations throughout Marcum’s audit work, such as client acceptance, engagement partner supervision and review, audit documentation, and technical consultations. In addition, under Giugliano’s leadership of Marcum’s quality control system, the firm did not sufficiently monitor the effectiveness of many policies and procedures and, in many areas, did not adequately communicate those policies and procedures to relevant personnel.
“PCAOB audit and quality control standards are the foundation of the auditor gatekeeping function,” said Carolyn Welshhans, Associate Director of the Division of Enforcement. “This action highlights that those with responsibilities for audit firms’ quality control systems, including national partners, must fulfill these critical obligations.”
The SEC’s order finds that Giugliano 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 that Giugliano caused Marcum to violate Rule 2-02(b)(1) of Regulation S-X. Without admitting or denying the SEC’s findings, Giugliano consented to cease and desist from committing or causing any violations and any future violations of Rule 2-02(b) of Regulation S-X and to pay a civil penalty of $75,000. Giugliano further agreed to a censure and to comply with certain undertakings for a period of three years, including having no leadership, management, oversight, or supervisory position at any registered public accounting firm.
The SEC’s investigation was conducted by Kathleen McDermott, Alexandra Arango, and Timothy Tatman, under the supervision of Ms. Welshhans and Laura Josephs.