Chicago (Aug. 5, 2004) — Top-tier firm Grant Thornton will pay $1.5 million to settle charges of securities law violations stemming from the Chicago firm’s 1998 audit of mortgage banker MCA Corp.

According to the Wall Street Journal, the seven-figure settlement stems from Grant’s 1998 audit of now-bankrupt mortgage-banking concern MCA Corp., which was charged with civil fraud by the SEC earlier this year.

The financial watchdog had charged that the Detroit office of Grant Thornton and the Troy, Mich.-based CPA firm of Doeren Mayhew & Co., had signed off on MCA’s financials with the knowledge that the reports contained false and misleading statements.

In the complaint filed in January, the SEC charged that now bankrupt MCA Corp. filed false 1998 annual financials and used those financial statements in connection with a public offering of debentures.

The SEC complaint added that “despite this knowledge, Grant Thornton and Doeren Mayhew jointly issued a report containing an unqualified opinion on MCA's 1998 annual financial statements and consented to the inclusion of their report in MCA's debenture offering.”

A spokesman for Grant Thornton said, “This agreement is neither an admission nor a denial of guilt in this matter, but we do accept the sanctions in the settlement, recognize the need for accounting professionals to take greater responsibility for detecting fraud, and support the SEC in their mission to better protect investors.”

As part of the settlement with regulators, Grant Thornton will spend at least $1 million to institute a training program in fraud detection for its professional staff.

“As agreed, we will be investing more than $1 million to initiate a firm-wide fraud-detection training program for our audit professionals, which we believe is the first such initiative in the accounting profession,” said the firm.


— WebCPA staff

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access