According to the SEC’s order, RSM US repeatedly represented that it was “independent” in audit reports issued on the clients’ financial statements, which were included or incorporated by reference in public filings with the Commission or provided to investors. Instead, the SEC found that RSM US or its associated entities, including other member firms of the RSM International network, provided non-audit services to, and had an employment relationship with, affiliates of RSM US audit clients, which violated the SEC’s auditor independence rules. The prohibited non-audit services included corporate secretarial services, payment facilitation, payroll outsourcing, loaned staff, financial information system design or implementation, bookkeeping, internal audit outsourcing, and investment adviser services. The prohibited employment relationship concerned a partner at an RSMI member firm in Australia serving on a voluntary basis as a non-discretionary member of the board of an affiliate of a RSM US issuer audit client. As detailed in the SEC’s order, certain of RSM US’s independence controls were also inadequate, resulting in the firm’s failure to identify and avoid these prohibited non-audit services and the prohibited employment relationship. These violations occurred between 2014 and 2015, with certain violations remaining undetected until at least 2016.
“The SEC’s auditor independence rules specifically prohibit audit firms from providing certain non-audit services,” said Carolyn M. Welshhans, Associate Director of the SEC’s Division of Enforcement. “Audit firms must put in place procedures, training, and systems that provide a reasonable assurance of independence, and they must monitor for independence on an ongoing basis.”