(Accounting Series Release No. 78)
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
March 25, 1957
In the Matter of
TOUCHE, NIVEN, BAILEY & SMART, et al.
(Pile No. 4-77)
(Rule II(e) - Rules of Practice)
OPINION OF THE
ACCOUNTING - PRACTICE AND PROCEDURE
Suspension of Privilege to Practice
Before Commission —
Lack of Independence by Accountant
Failure to Comply with Accepted Accounting
In a proceeding under Rule II(e) of the Commission's
Rules of Practice, where a firm of certified public
accountants certified financial statements filed
with the Commission which were materially misleading
in that, among other things, the balance sheet understated
reserves for uncollectible accounts, overstated
current assets, and listed as due from customers
material amounts which represented advances to
subsidiaries, and the income statement made insufficient
provision for losses on uncollectible accounts,
and the firm and two partners who participated in the
preparation and filing of the statements improperly
relied upon unsupported representations of management
with respect to these matters, held, the firm and
the partners engaged in improper professional conduct
and their privilege to practice before the Commission
should be suspended for 15 days.
Edmund H. Worthy, for the Office of the Chief Accountant
of the Commission.
Eustace Seligman, Howard T. Milman, Jerome Gotkin, Bruce
A. Hecker, and Sullivan & Cromwell, for respondents.