The US Securities and Exchanges Commission has filed a case against a PwC audit partner for allegedly failing to properly inspect the withdrawal of millions of dollars from a fund.

The Securities and Exchange Commission has begun proceedings against a PricewaterhouseCoopers audit partner for alleged failings in due diligence checks and improper disclosure of transactions.

The enforcement division of the Washington DC-headquartered financial watchdog said that Adrian Beamish failed to scrutinize millions of dollars that were withdrawn from Burrill Life Sciences Capital Fund III in related party transactions under the guise of “advanced management fees”.

The SEC alleges Beamish did not determine whether the fund’s advisor, G. Steven Burrill, had the authorization and rationale for taking the money.

In addition, he allegedly failed to ensure that the transactions were properly recorded in the fund’s financial statements. 

Earlier this year, Burrill settled an SEC case that found he spent the money he siphoned from the fund to keep his other businesses afloat, as well as on family vacations and private jets, and to pay for other unauthorized personal expenses.

“Auditors perform a critical check on fraudulent conduct, expecially when related party transactions are involved,” said Jina Choi, director of the SEC’s San Fransisco regional office, adding: “We allege that Beamish’s repeated failure to exercise professional scepticism prevented him from recognizing that Burrill was stealing investor money from the fund.”

The proceedings against Beamish will determine whether he should be suspended from appearing or practicing as an accountant, which includes financial reporting and conducting audits of public companies.

The matter will be scheduled for a public hearing before an administrative law judge, who will prepare an initial decision outlining the appropriate remedial actions, if any.

Family Wealth Report will closely follow the case and will provide additional reporting when appropriate.

The case continues.