The U.S. Securities and Exchange Commission has reinstated an accountant who botched an audit that contributed to the 2019 demise of the College of New Rochelle.
Now certified public accountant Christopher L. Stanley, 48, of Tarrytown, may prepare or review financial statements that are filed with the commission, according to a Dec. 20 order, but may not appear as a member of an audit committee or as an independent accountant.
The SEC says that Stanley has shown good cause for reinstatement and that no adverse information has come to its attention “relating to his character, integrity, professional conduct or qualifications.”
In 2013, as enrollment and tuition revenue began to decline, the college’s controller, Keith Borge, began using endowment funds to bridge the gap between revenues and expenses, according to court records. He failed to pay $20.4 million in payroll taxes, misused federal grants, overdrew bank accounts, depleted the endowment fund, and made up numbers on financial statements.
Stanley, a partner with KPMG accounting, was responsible for the college’s 2015 independent audit. In 2016 he issued a “clean opinion” stating that the audit accorded with generally accepted auditing standards.
Stanley had failed to detect Borge’s fraud, according to the SEC. The audit overstated the college’s net assets by $33.8 million, and bond investors who relied on the numbers lost more than $600,000.
College of New Rochelle, founded in 1904 as the first Catholic college for women in New York, shut down in 2019.
Borge pled guilty to criminal charges and was sentenced to federal prison. He was released early, in 2022.
Stanley resigned from KPMG in 2020.
In 2021, the SEC suspended him from practicing before the commission for engaging in improper professional conduct.
He had failed, the SEC found, to obtain sufficient audit evidence, prepare proper documentation, examine journal entries for evidence of fraud, assess the risk of misstatements, communicate audit challenges to the college, supervise the audit, and exercise due professional care and professional skepticism.
The SEC concluded that Stanley has shown “good cause” for reinstatement. And he has attested that when he does practice before the commission his work will be reviewed by his client’s independent audit committee.
If he wants to seek reinstatement to practice as a member of an audit committee or as an independent accountant, he must submit a new application to the SEC.
