Two overseas auditors have been charged by the Securities and Exchange Commission for alleged misconduct in the audits of British software company AremisSoft Corp.
Filed in federal court in Manhattan, the suit alleges that Savvides & Partners/PKF Cyprus, a Cyprus-accounting firm, and R.K. Dhawan & Co., an Indian accounting firm, failed to conduct basic auditing procedures that would have detected fraud at AremisSoft. The SEC is seeking civil penalties from the firms, as well as Pavlos Meletiou and R.K. Dhawan.
In 2005, the former co-chief executive of AremisSoft, Roys Poyiadjis, agreed to pay $200 million to settle charges that he unloaded millions of shares in the software company while misleading investors about its revenue. The payment was the largest amount ever recovered by the SEC. Charges are still pending against Lycourgos Kyprianou, AremisSoft's other former co-chief executive.
The SEC claims that AremisSoft -- which declared bankruptcy and ceased operations in 2002 -- engaged in a number of fraudulent practices to make it appear as if the company had sales growth, booking fictitious sales and overstating earnings at two units.
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