Both public and private companies face constant scrutiny from a myriad of stakeholders, including competitors, regulators, government entities and shareholders. Those same stakeholders also tend to look to a company’s accountants when allegations of financial reporting irregularities are raised to understand whether the accountant contributed to such irregularities by not adhering to strict and highly complex professional standards.
Hemming Morse’s professionals are particularly well positioned and experienced to assist in investigations dealing with claims of corporate fraud or audit malpractice. Our clients benefit from the investigative expertise of a staff of seasoned professionals to conduct appropriate investigations, report findings, consult with counsel and testify in both civil and criminal proceedings, if necessary.
We also regularly provide an objective and knowledgeable assessment of whether such professional standards applicable to accountants and auditors have been met, in the context of allegations of professional malpractice.
Audit Failure Involving Revenue Recognition Issues
Hemming Morse was retained by the SEC as an expert on accounting principles and auditing standards in the investigation of both Xerox and its auditors for fraud in connection with the company’s financial statements. The investigation arose in connection with restatements totaling $6.1 billion of revenue and $1.9 billion of earnings, involving transactions in five countries.
Calculation of Damages in Connection with an Audit Failure
Hemming Morse assisted counsel for a “Big Four” accounting firm regarding claims brought by the city of San Jose. The city alleged improper activity by several of the nation’s largest brokerage houses, as well as an audit failure by the firm, resulting in a $75 million bond portfolio loss. The Hemming Morse team recreated the city’s trading portfolio and developed and testified about a damages model that assisted in apportioning damages between potentially responsible parties.