Investview’s former accountant fined $400,000 over audits
Investview’s former accounts have been fined $400,000 for filing dodgy audits with the SEC.
One individual accountant has also been fined $65,000 and barred from being associated with a registered public accounting firm.
The Public Company Accounting Oversight Board (PCOAB), fined Haynie & Company as per a January 23th order.
The Investview audits in question date back to 2019.
On the 2019 Investview Audit, the Firm violated PCAOB rules and standards by failing to obtain sufficient appropriate audit evidence concerning:
(1) Investview’s accounting for its acquisition of United Games, LLC and United League, LLC (collectively, “United Games”);
(2) Investview’s cryptocurrency mining revenue; and
(3) a license agreement held by Investview.
Auditing issues related to the acquisition pertain to Haynie and Company failing to have properly evaluated Investview’s valuation of United Games.
According to its public filings, Investview estimated the valuation of the intangible assets it acquired from United Games at approximately $1.8 million, and the Investview shares used as consideration at approximately $800,000, resulting in a one-time gain of approximately $971,000 recorded in earnings in 2019.
Investview used a third-party valuation firm (the “Third-Party Specialist”), to support these fair value estimates.
The valuation reports prepared by the Third-Party Specialist relied on data and assumptions provided by Investview.
(Haynie and Company) failed to test the projections that Investview provided to the Third-Party Specialist.
Haynie failed to evaluate whether the United Games acquisition was presented fairly, in all material respects, in conformity with the applicable financial reporting framework.
With respect to Investview’s cryptocurrency mining revenue, which at the time was run through Kuvera Global, PCOAB writes;
Investview reported net cryptocurrency mining revenue of approximately $1.94 million for the fiscal year ended March 31, 2019.
Haynie identified improper revenue recognition as a significant risk and a fraud risk.
Haynie failed to obtain sufficient appropriate audit evidence related to Investview’s cryptocurrency mining revenue, because the Firm
(1) failed to evaluate whether Investview’s cryptocurrency mining revenue recognition approach was presented in conformity with ASC 606, which Investview adopted at the beginning of the 2019 fiscal year; and
(2) failed to perform detailed testing of a $3.83 million component of cryptocurrency mining net revenue representing the amounts Investview paid to its cryptocurrency mining supplier.
Long story short, Investview misreported how much it paid its mining supplier. Haynie and Company, despite identifying this section of Investview’s business as a “fraud risk”, failed to do any detailed assessment of Investview’s reporting.
As such, Investview got away with overreporting $370,000 it never paid to its mining supplier.
Haynie failed to perform substantive procedures, including tests of details, specifically responsive to the Firm’s identification of improper revenue recognition as a significant risk and fraud risk.
Finally, with respect to the cited license agreement, there were inconsistencies from Investview as to its status.
Based on an oral representation from Investview’s accounting staff, Haynie noted in a planning work paper that “the license agreement is no longer of value to the company as the service and license has failed due to issues with the brokerage platform.”
Haynie later received a management representation from Investview’s Director of Finance indicating that the License Agreement was not impaired.
Haynie failed to take any steps to resolve the inconsistent representations from Investview management regarding the License Agreement.
Staff were telling Haynie and Company the license agreement was worthless. Investview’s Director of Finance contradicted this stance, and Haynie and Company did nothing either way.
Unrelated to Investview, PCOAB also found irregularities with a Haynie & Company audied filed for George Risk Industries.
As a result, PCAOB concluded;
For all of the reasons described above, Haynie failed to exercise due professional care and professional skepticism on the 2019 Investview Audit.
PCAOB is a
nonprofit corporation created by the Sarbanes–Oxley Act of 2002 to oversee the audits of US-listed public companies.
Congress vested the PCAOB with expanded oversight authority over the audits of brokers and dealers registered with the SEC in 2010 through the Dodd–Frank Wall Street Reform and Consumer Protection Act.
The PCAOB has five board members, including a chairman, each of whom is appointed by the SEC.
Possibly explaining Investview’s accounting discrepancies for 2019, BehindMLM flagged securities fraud violations with Investview and Kuvera Global in May 2019.
Investview would go on to rebrand Kuvera Global as iGenius in 2021. The fraudulent investment scheme remained intact.
As of January 2022, Investview and iGenius are the subject of an ongoing SEC investigation. Whether PCAOB’s accounting penalties is a precursor to further action by the SEC is unclear.