For many business owners, executives, and accounting professionals, the word “audit” triggers anxiety—but it’s often seen as a procedural hurdle rather than a legal threat. However, when auditors uncover what they call “irregularities,” the situation can shift dramatically. What may have started as a compliance review can quickly become a criminal investigation. And by the time you’re aware that something is wrong, law enforcement may already be involved.
At Simmons & Wagner, we’ve seen firsthand how fast this transformation happens. As former Orange County District Attorneys, we understand how audit findings can fuel criminal charges—and we know how to intervene before your livelihood, reputation, and freedom are put on the line.
The Audit Process: Where It Begins—and Where It Can Go Wrong
An audit is a financial examination conducted either internally by company auditors or externally by accounting firms, regulatory bodies, or government agencies. Its purpose is to ensure the accuracy and legitimacy of your books and business practices. But auditors aren’t just looking for mistakes—they’re also trained to detect fraud indicators, even subtle ones.
Certain red flags can cause auditors to escalate their findings beyond your company:
- Inconsistencies between financial statements and underlying records
- Missing invoices or questionable vendor relationships
- “Round-dollar” transactions that suggest fabricated numbers
- Repeated adjusting journal entries with no clear documentation
- Revenue recognition issues that artificially inflate profits
When these or similar issues are found, auditors may consult with corporate counsel or even report their suspicions directly to regulators or law enforcement agencies under mandatory reporting statutes. And in some cases, a whistleblower within the company may bring those same findings to the government—triggering a deeper criminal inquiry.
When Audits Turn into Investigations
A critical shift happens when audit irregularities lead to suspicion of intentional wrongdoing. While financial mistakes and negligence might lead to civil fines or compliance orders, intentional misstatements—such as falsifying financial records or hiding assets—are often treated as white-collar crimes.
Here’s how that transition typically unfolds:
- Initial audit findings raise questions.
- Outside counsel or forensic accounting firms are brought in.
- Investigators begin interviewing employees and requesting sensitive data.
- Government agencies (e.g., IRS, SEC, DOJ) may be notified.
- You or your business receive subpoenas or target letters.
At this point, the case is no longer internal. Even if charges haven’t yet been filed, you are now under suspicion—and every move you make could either protect or endanger your defense.
Signs You May Be Under Criminal Scrutiny
Often, clients don’t realize how serious the situation is until it’s too late. Watch for these signs that your audit may have morphed into a criminal investigation:
- You’re being asked to attend unscheduled or “informal” interviews with no explanation.
- Company lawyers start handling your communications or advise you to “stay quiet.”
- Emails, financial records, or devices are being seized or reviewed without context.
- Regulators such as the SEC, IRS, or FBI begin contacting your company.
- You receive a subpoena or target letter—or are told not to destroy any documents.
If any of the above is happening, you need independent legal counsel immediately. Internal corporate counsel represents the company—not you.
What You Should Do Immediately
If you even suspect your audit could lead to a criminal fraud allegation, take the following proactive steps to protect yourself:
Do Not Make Assumptions
- Avoid brushing off audit findings as a “technical issue” or “nothing to worry about.”
- Auditors may be polite, but they aren’t your defenders in a legal crisis.
Retain Independent Criminal Defense Counsel
- Do not rely solely on your company’s legal team—they may have conflicting priorities.
- A white-collar criminal defense attorney can assess your individual exposure.
Preserve All Documents
- Do not delete, shred, or alter any files, communications, or accounting records.
- Destruction of evidence—even unintentionally—can escalate to obstruction charges.
Stop Talking Without Counsel Present
- Anything you say to investigators or auditors can be used against you.
- Even internal meetings can be documented and subpoenaed later.
Prepare a Factual Timeline
- With your attorney, document your role in the accounting practices in question.
- Note dates, who was involved, and what procedures were followed.
The Role of Simmons & Wagner in These Cases
As former Orange County prosecutors, we don’t just understand audits—we understand how they lead to indictments. Our firm brings a prosecutor’s insight to criminal defense, allowing us to:
- Intervene early to reduce the risk of charges being filed at all.
- Challenge the assumptions behind “irregularities” with expert accounting analysis.
- Negotiate cooperation on your terms, avoiding self-incrimination.
- Push back on prosecutorial overreach when routine errors are miscast as crimes.
Our experience in both prosecuting and defending white-collar cases means we know the strategies government lawyers use—and how to dismantle them.
The Time to Act Is Now
If you’ve been told your audit revealed “irregularities,” or if your access to documents or systems has suddenly changed, don’t wait for the knock on the door. Whether you’re a CEO, accountant, or small business owner, the risks are real—and the consequences can be life-altering.
Simmons & Wagner is ready to step in and protect your rights from the moment suspicion arises. We’ve been on the other side of the courtroom, and we know how to fight for you.
Call (949) 439-5857 now for a confidential consultation with a Business Fraud Attorney in Orange County.