SEC Charges National Office Partner at Marcum for Causing Widespread Quality Control Deficiencies

The Securities and Exchange Commission (SEC) has taken action against Alfonse Gregory Giugliano, CPA, the former National Assurance Services Leader at Marcum LLP, a public accounting firm. Giugliano is charged with failing to adequately address and rectify numerous deficiencies in Marcum’s quality control system. This action follows the SEC’s previous charges against Marcum for these quality control deficiencies and other violations, particularly related to its audit work for numerous special purpose acquisition companies (SPACs).

According to the SEC’s order, Giugliano was responsible for overseeing the quality control aspects of Marcum’s public company practice, including relevant quality control policies, procedures, and monitoring. He also had direct or indirect supervision over all personnel involved in Marcum’s quality control functions. As Marcum’s public company practice experienced significant growth, it revealed significant deficiencies in these areas. Furthermore, the SEC’s order states that Giugliano was aware of inspections conducted by the Public Company Accounting Oversight Board (PCAOB) and internal Marcum inspections, which identified numerous deficiencies in Marcum’s quality control system. However, Giugliano did not adequately address and correct these issues, resulting in quality control and audit standard violations across Marcum’s audit work. These violations included issues related to client acceptance, supervision and review by engagement partners, audit documentation, and technical consultations. Under Giugliano’s leadership of Marcum’s quality control system, the firm failed to effectively monitor many policies and procedures and often failed to communicate these guidelines effectively to relevant personnel.

Carolyn Welshhans, Associate Director of the Division of Enforcement, emphasized the importance of PCAOB audit and quality control standards as essential for the auditor gatekeeping function. She stated that those responsible for audit firms’ quality control systems, including national partners, must fulfill these critical obligations.

The SEC’s order concludes that Giugliano engaged in improper professional conduct, as defined by Section 4C(a)(2) of the Securities Exchange Act of 1934 and Rule 102(e) of the SEC’s Rules of Practice. Additionally, Giugliano caused Marcum to violate Rule 2-02(b)(1) of Regulation S-X. Without admitting or denying the SEC’s findings, Giugliano consented to cease and desist from committing or causing any violations and any future violations of Rule 2-02(b) of Regulation S-X. He also agreed to pay a civil penalty of $75,000 and accepted a censure. Giugliano further committed to comply with specific undertakings for a three-year period, including refraining from holding any leadership, management, oversight, or supervisory position at any registered public accounting firm.