“When audit reports are used to sell municipal bonds, investors expect those reports to be accurate,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.  “Consolo failed to exercise professional skepticism and PKF O’Connor Davies issued false unmodified audit reports, and they left investors without an accurate picture of the town’s finances and its ability to repay bondholders.”

Consolo and PKF O’Connor Davies consented to the SEC’s order without admitting or denying the findings.  The firm agreed to forfeit approximately $380,000 in audit fees and interest and pay a $100,000 penalty.  O’Connor Davies also must engage an independent consultant.  Consolo agreed to pay a $75,000 penalty and be suspended from practicing public company accounting.  He’s also prohibited from acting as the engagement partner or engagement quality control reviewer on any municipal audit for five years.