The Securities and Exchange Commission (SEC) has suspended three former BDO US accountants for ‘predating’ audit work papers.

The SEC found BDO fell behind schedule while conducting its 2013 integrated audit of the insurance company AmTrust Financial Services and failed to complete audit procedures before the company’s deadline to file its annual report with the SEC.

BDO’s senior manager of the audit engagement Lev Nagdimov was found to have instructed the audit team to sign off on all work papers and audit programmes regardless of whether the work was finished.

Following this, Nagdimov instructed the team to load and sign blank or placeholder work papers in BDO’s electronic files. This led to the team predating audit documentation.

After AmTrust filed its 2013 annual report the audit team completed the incomplete work papers by overwriting the existing documentation in the placeholder work papers. The SEC discovered the predating following a request to see an earlier snapshot of the work papers from the period of when they were predated and then comparing it to the backdated work.

The SEC found if BDO’s engagement partner Richard Bertuglia and engagement quality review partner John Green had exercised due professional care, they would have identified the audit deficiencies before they released the audit report, which provided ‘unqualified opinions on AmTrust’s 2013 financial statements and internal control over financial reporting’.

Nagdimov, Bertulgia and Green neither admitted nor denied the SEC’s findings but agreed to be suspended from appearing before the SEC as accountants.

The SEC’s order allows Nagdimov to apply for reinstatement after five years, Bertulgia after three years and Green after one year.

SEC’s director of the Fort Worth regional office Shamoil Shipchandler said: “Auditors are entrusted with significant responsibility when auditing public companies. Public accountants who manipulate their files to conceal audit deficiencies represent a serious breach of those professional obligations, and the Commission will impose suspensions to protect investors.”