Accounting Profession Defense

Hunton Andrews Kurth LLP litigators have represented the accounting profession in courts and before regulatory bodies for decades.

Our lawyers have counseled major national accounting firms, as well as individual accountants, in SEC and PCAOB investigations, state board of accountancy matters, audit malpractice litigation in state and federal courts, securities class actions, and disputes with audit clients. Our team has represented accountants in regulatory matters relating to some of the largest domestic and international accounting scandals in history.

Our lawyers have also worked closely with the accounting profession, having assisted the American Institute of Certified Public Accountants in preparing amicus briefs and evaluating legal developments impacting the profession.

Our team includes:

• Former counsel to SEC Commissioner
• Former chair of Virginia Board of Accountancy
• Multiple former AUSAs
• Former counsel to House of Representatives investigative committee
• Former attorney in IRS Office of Chief Counsel
• Former attorney-advisor to two Tax Court judges
• Attorneys in New York; Washington, DC; Texas and California

Our thorough understanding of the audit process, GAAP, and GAAS enables us to explain professional standards in courtrooms, in conference rooms at the SEC, and in other venues.

Related Experience

Regulatory Investigations

• Defense of national accounting firm in multiple ongoing SEC investigations relating to firm’s audits of crypto companies.
• Defense of Big Four firm in an SEC investigation relating to audit client’s earnings-manipulation scheme that resulted in criminal convictions of audit client officers.
• Defense of national accounting firm in ongoing SEC investigation following audit client’s restatement.
• Defense of Big Four firm in an SEC investigation following audit client’s restatement and bankruptcy.
• Defense of company CFO, controller, and accounting staff in SEC investigation relating to the disclosed value of a $2 billion portfolio of mortgage derivatives.
• Defense of national accounting firm as witness in SEC’s ongoing suit against former executive of audit client.
• Represented many issuers and issuer executives in investigations related to accounting irregularities, insider trading, disclosure fraud, and other alleged regulatory violations.
• Defense of national accounting firm in PCAOB investigation relating to firm’s alleged failure to cooperate in PCAOB inspection.
• Defense of national accounting firm in PCAOB investigation relating to multiple alleged quality control deficiencies and independence violations.
• Defense of national accounting firm in multiple IRS inquiries relating to work on tax shelters.
• Defense of national accounting firm in House of Representatives investigation relating to collapse of audit client.
• Defense of multiple national accounting firms (and their partners) before more than 20 state boards of investigation, including New York, Florida, Texas, and California, in matters related to alleged audit failures, independence matters, and licensure matters.

Federal and State Litigation

• Defense of national accounting firm in multi-district litigation (California and Florida) relating to the collapse of FTX.
• Defense of Big Four firm in lawsuit brought in the Southern District of New York by an acquirer based on the accounting firm’s preparation of a closing balance sheet for purposes of the acquisition. Acquirer alleged that accounting firm committed fraud in its preparation of the closing balance sheet. Firm’s motion to dismiss was granted.
• Defense of national accounting firm against claims of fraud and professional negligence brought in Virginia state court by audit client following discovery of false financial reporting by audit client executives. The court granted accounting firm’s motion to dismiss based on an exculpatory clause in the firm’s engagement letter holding the firm harmless from any claims arising from the audit client’s own misconduct.
• Defense of national accounting firm against claim of professional negligence brought in Virginia federal court by shareholder of audit client. The court granted the accounting firm’s motion to dismiss based on the lack of privity between the accounting firm and the shareholder.
• Defense of Big Four firm in connection with a claim by a client alleging that the firm was negligent in failing to detect fraud and seeking damages in excess of $1 billion. The case was settled on favorable terms.
• Defense of Big Four firm in private malpractice lawsuit brought in New Jersey state court by acquirer of accounting firm’s audit client. Acquirer alleged that accounting firm’s audits were deficient for failing to detect audit client’s financial statement fraud. Case was terminated with no liability to accounting firm.
• Defense of national accounting firm in derivative lawsuit alleging claims of audit malpractice and aiding and abetting breach of fiduciary duty following audit client’s restatement.
• Defense of national accounting firm in multiple litigation matters relating to firm’s audit work for municipalities.

Internal Investigations Relating to Accounting Irregularities

• Represented Big Four firm in discussions with audit client regarding suspected financial fraud. Shadowed audit committee investigation conducted pursuant to 10A.
• Conducted special litigation committee investigation at Fortune 50 financial services firm relating to fair market values ascribed to residential mortgage-backed securities and related derivatives.
• Conducted internal investigation at Fortune 50 financial institution relating to double-pledging of mortgages and the collapse of nation’s largest nonbank mortgage lender.
• Conducted audit committee investigation at national transportation company relating to alleged premature revenue recognition.
• Represented national accounting firm in discussions with audit client’s audit committee following whistleblower allegations of executive malfeasance.

Advisory Matters

• Represented multiple national accounting firms in consultations with the SEC’s Office of Chief Accountant regarding independence matters.
• Advised multiple accounting firms on independence rules and related controls.
• Advised accounting firm networks regarding vicarious liability risks.
• Advised multiple clients on use of data analytics and related technology in audit work.
• Advised client on state accountancy statutes’ restrictions on accounting titles.
• Advised multiple accounting firms and private equity investors on formation of alternative practice structures.