Auditors of Now-Bankrupt MCA Financial Corporation Settle Charges of Fraud and Improper Professional Conduct

Respondents were charged with aiding and abetting financial reporting violations in the offer, sale and purchase of securities by MCA Financial Corporation, a Southfield, Michigan-based mortgage banking company which filed for bankruptcy in 1999. They issued an unqualified (joint) audit opinion while allegedly failing to inform MCA’s Board of Directors of the non-disclosure of millions of dollars of material, related party transactions. As such, the SEC also found their professional conduct to be improper, including for failing to adequately plan the audit and to act with sufficient skepticism in its conduct, and for failing to obtain enough evidence to support their conclusions.