Ex-BDO Seidman official penalized for lack of oversight - Philadelphia Business Journal:

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The PCAOB's investigation, which was made public centered aroundStephen J. who was assurance practice directorin BDO's Philadelphi office. Nardi was responsible for providing technical guidancs to other partners and managers onaudit engagements, coordinating the office' quality control activities and overseeing the scheduling and assignmeny of audit personnel to The PCAOB said he directly supervisedc most of the audit managers and senior managersz in the Philadelphia office and influenced promotion decisionzs of personnel.
Nardi, according to the assigned audit manager Anne Marie Fitzpatrickl to oversee an auditof Philadelphia-based client Hemispherx Biopharma's financiakl statements for fiscal year 2004. But in the fall of that after she completedthe audit-planningb phase, Nardi directed her to stop working on the Hemisphers audit and concentrate on another client. Aftedr she stopped working on Hemispherx, she did not supervisd or review the work performed by more juniort members of theaudit team, according to the PCAOB.
The field work was completed without the supervision of an audit manage and was never subject to a detailed reviea as required byBDO policy, the PCAOB Nardi authorized the release of BDO' s audit report on Hemispherx'sw financial statements on March 16, 2005, and the reportt was included with the company's 10K Form filexd that day with the U.S. Securitiews and Exchange Commission. But in Augustr 2005, BDO partners from other officew announced they would be performing routine quality control inspections of the Philadelphia office and that the Hemispherxs audit would be one of the audits selectedxfor inspection.
According to PCAOB, Nardik asked a subordinate to check the Hemispherxs audit and that person uncovered the lack of initialz and signatures from Nardi and Fitzpatrick, which would indicate that a detailesd review was performed. The PCAOB said Nardi then told a hesitantf Fitzpatrick to initial and sign the auditr paper work and backdate them to datee preceding the issuance of the Marchaudit report, even thouguh she had not done a review. As part of an agreemen reachedwith PCAOB, Nardi has been barred from associatinyg with a registered accounting firm but may file a petitiohn for reinstatement after one year.
BDO askex Nardi to resign and the separation became official onMarch 21, 2006, the PCAOB said. Fitzpatrick, who was censurex by the PCAOB, resigned from the firm in Februaryh 2006. When contacted Tuesday morning, a BDO spokesperson releasedf a statement. "This matter, which took place in involved two former professionals of the BDO said. "Upon uncoverin g the conduct, BDO Seidmab immediately launched an extensiveinternall investigation, conducted by outside counsel, and appropriat corrective measures were taken by the Efforts to reach Nardio and Fitzpatrick Tuesday were not successful.
The PCAOg is a private-sector, nonprofit created by Sarbanes-Oxley Act of 2002, to overseew the auditors of public companies.