Akazoo was a music streaming firm that went public in 2019 claiming 4.6 million paying subscribers and $120m in annual revenues.
As it turned out – in the words of US financial regulator the SEC – it had “no paying users and, at most, negligible revenue”.
That verdict was revealed in the SEC’s 2021 announcement of a $38.8m settlement with Akazoo over fraud allegations. Now there’s a follow-on from that concerning the auditors who signed off on the company’s 2018 financial statements before it went public.
“Crowe U.K. claimed that it conducted its 2018 audit in accordance with Public Company Accounting Oversight Board (PCAOB) standards when, in fact, its Akazoo audit team had almost no experience or training in PCAOB standards,” claimed the SEC.
“Further, the order finds that the audit team overlooked red flags when, for instance, they failed to exercise an appropriate level of due professional care or professional skepticism when Akazoo presented fabricated agreements and inauthentic confirmation letters to the audit team.”
The company, its CEO and senior auditor have agreed to pay total penalties of $785k to settle the charges, without admitting or denying the findings.
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