New London Auditor Challenges NCUA
The accounting firm that reviewed the financials and performed audits of the defunct New London Security Federal Credit Union's records has denied claims that it failed to detect fraudulent activity, an allegation made by NCUA in a March 19 complaint.
According to several media reports, Beller, Shepatin and Co. PC, Robert Shutsky, an employee at the accounting firm, and Ed Lorah and Associates LLC, which was a successor firm, filed a June 11 response denying the NCUA's claim of professional malpractice. Marisa Lanza and Andrew Pisanelli, the defendants' attorneys, according to local publications, did not return calls to Credit Union Times.
Since at least 1994, New London used Beller Shepatin to conduct audits and reviews of its financial statements, including accounts with A.G. Edwards & Sons Inc. In several reports, the accounting firm concluded that the CU's statements fairly presented, in all material respects, the financial condition of the credit union, NCUA said in its complaint. Issued in October 2001 and October 2007, the auditor's reports showed the CU's assets at $10.4 million and more than $12.4 million, respectively. New London continued to make deposits into the A.G. Edwards account based on the reports' standings. Around July 2008, it was discovered that an investment account did not exist at Wachovia, formerly A.G. Edwards.
Acting as the liquidating agent, the NCUA said Beller Shepatin "had a duty to exercise the degree of skill, diligence, and professional care that an accounting firm should exercise in performing audits and reviews in accordance with the code of professional conduct," but the firm failed to meet those standards. The firm also failed to properly request confirmation of the accounts being audited, to adhere to proper standards by maintaining control over the entire confirmation process and failed to detect, identify and question the inconsistencies and differences in the account statements it received for the two separate CU accounts at A.G. Edwards, among other lapses, the suit charges.