John Aesoph and Darren Bennett apparently didn’t much like being auditors, what with all of the auditing that it requires. Luckily for them, an SEC judge has given them the vacation from auditing they seemed to desire.
The auditors, John J. Aesoph and Darren M. Bennett, engaged in "highly unreasonable conduct" when they didn't properly scrutinize the loan-loss reserves at TierOne Bank of Lincoln, Neb., said Carol Fox Foelak, an SEC administrative law judge. She ruled that Mr. Aesoph should be suspended for one year and Mr. Bennett for six months….
Judge Foelak said the KPMG auditors didn't comply with professional standards and didn't have a reasonable basis for their audit estimates when they gave the bank a clean bill of health on its finances. The auditors knew TierOne's bad-loan reserves merited "heightened scrutiny," the judge said, and that "Numerous red flags indicated that management was inept and had an incentive to understate losses." But the auditors' procedures "failed to sufficiently address these issues," the judge said.