UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 44461 / June 21, 2001

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1413 / June 21, 2001

ADMINISTRATIVE PROCEEDING
File No. 3-10521

I.

The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") be, and they hereby are, instituted against J. Allen Seymour ("Seymour"). Accordingly, IT IS HEREBY ORDERED that said proceedings be, and hereby are, instituted.

II.

In anticipation of the institution of these administrative proceedings, Respondent Seymour has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings herein, except that he admits the jurisdiction of the Commission over him and over the subject matter of these proceedings, Seymour consents to the issuance by the Commission of this Order Instituting Public Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing A Cease-and-Desist Order (`Order").

III.

On the basis of this Order and of the Offer of Seymour, the Commission makes the following findings¹:

A. RESPONDENT

Seymour, of Athens, Georgia, is a certified public accountant ("CPA") licensed by the State of Georgia. Seymour conducted the 1994 audit of Vista's annual financial statements. These financial statements were included in Vista 2000, Inc.'s ("Vista") September 30, 1994 annual report filed with the Commission on Form 10-KSB ("1994 Form 10-KSB"). During his 1994 audit of Vista, Seymour practiced under the name of Roemmich and Seymour P.A. ("R&S") and conducted the Vista audit in a joint venture with another CPA (the "venture partner").

B. ISSUER INVOLVED

Vista, formerly located in Roswell, Georgia, designed, developed, manufactured and marketed consumer products including trigger guards for firearms and carbon monoxide detectors for homes. Vista's initial public offering occurred on October 25, 1994. Vista's common stock, which was registered pursuant to Section 12(g) of the Exchange Act, was traded on the NASDAQ SmallCap Market system until it became listed on the NASDAQ National Market system ("NASDAQ") on February 13, 1996. On May 31, 1996, Vista's stock was delisted from the NASDAQ.

C. IMPROPER AUDITING PRACTICES IN CONNECTION WITH THE 1994 AUDIT

1. Lack of independence during the 1994 audit

At the venture partner's suggestion, he and Seymour jointly bid on the 1994 Vista audit engagement. Seymour and his firm, along with the joint venture partner, were engaged as Vista's auditors on January 9, 1995. At the time of their bid and during the course of their engagement, the venture partner owned 23,333 shares of Vista common stock.

At all times during the 1994 audit of Vista's financial statements, the venture partner lacked independence because he owned Vista common stock. (See AU §220, Independence; see also Article 2 of Regulation S-X, Qualifications and Reports of Accountants). The independence of Seymour and R&S was similarly impaired by virtue of the venture partner's lack of independence. Despite his impairment of independence, Seymour issued an unqualified opinion on Vista's 1994 financial statements which was included in Vista's 1994 Form 10-KSB. By issuing an unqualified opinion, Seymour violated generally accepted auditing standards ("GAAS") because the audit opinion failed to state that Seymour's firm lacked independence. (See AU §§504.08-.10, Association with Financial Statements, Disclaimer of Opinion When Not Independent and Rule 2-01 of Regulation S-X, Qualifications of Accountants, 17 C.F.R. 210.2-01).

Seymour knew or was reckless in not knowing that his venture partner owned Vista stock which caused the independence of Seymour and his firm to be impaired. In part as the result of Seymour's conduct, Vista filed its 1994 Form 10-KSB with the Commission which included financial statements certified by public accountants who were not independent.

2. Failure to make predecessor-successor communications

On or about December 6, 1994, Vista terminated a multinational accounting firm ("predecessor accountants") as its independent accountants. On or about January 9, 1995, Seymour visited the offices of the predecessor accountants to review certain workpapers. However, Seymour never made any inquiries of the predecessor accountants required under GAAS (AU 315, Communications Between Predecessor and Successor Auditors). For example, Seymour failed to ask about facts that might bear on the integrity of Vista's management; disagreements with management as to accounting principles, auditing procedures, or other similar significant matters; and on the predecessor accountant's understanding as to the reasons for the change of auditors. Had Seymour made the required inquiries, he would have become aware of the accounting issues related to Vista's past attempts to improperly recognize income from the Promotional Marketing Inc. transaction discussed below.

3. Vista's 1994 annual report on Form 10-KSB

On February 1, 1995, Vista filed its 1994 Form 10-KSB. Vista's 1994 Form 10-KSB reported revenues of $1,971,678, a net loss of $329,000, net loss per share of $.15, and total assets of $2,584,709. Vista misstated these amounts by 985%, 84%, 85%, and 81%, respectively; actual revenues were $181,678, net loss was $2,119,500, net loss per share was $.99, and total assets were $1,429,709. The misstatements were due to the fictitious recording of a $1.2 million sale of marketing rights and $635,000 of product sales.

a) Promotional Marketing Inc. transaction

Vista disclosed in its 1994 Form 10-KSB that on September 15, 1994, it sold marketing rights to its trigger guard products for firearms to Promotional Marketing Inc. ("PMI") for a $1.2 million note from PMI. This transaction, however, lacked economic substance. PMI was a telemarketing company principally for the resort and cruise industries with no experience in selling firearm or other products. At the time of this purported sale, the products had not been manufactured and had no proven market demand or acceptance. Further, the collectibility of the note was dependent upon the resale of the products by PMI and no portion of the note was reserved as an allowance for doubtful accounts.

As a result, Vista improperly reported $1.2 million as other income on its income statement and $1,155,000 as a receivable from PMI for this transaction. The $1.2 million of income represented 61% of Vista's total revenues of $1,971,678 for the year ended September 30, 1994 and the receivable represented 45% of Vista's total reported assets of $2,584,709.

Prior to the engagement of R&S as its auditors, Vista had unsuccessfully attempted to persuade two other accounting firms, including the predecessor accountants, to allow it to recognize this transaction as a sale.

On November 23, 1994, PMI, with Vista's consent, purportedly transferred the above marketing rights to Dixie Sales Consultants ("Dixie Sales"). However, this transaction itself lacked substance. There is no evidence that Dixie Sales ever existed, or that the agreement to transfer the marketing rights or $1.2 million promissory note was ever executed. Seymour, without any basis, determined that the transfer to Dixie Sales validated the recognition of the sale of the marketing rights by Vista.

Vista's "sale" of marketing rights was not recorded in conformity with generally accepted accounting principles ("GAAP") because it lacked any economic substance and because neither PMI nor Dixie Sales had the ability or intent to pay for the note. As noted above, there is no evidence that Dixie Sales or that an executed note receivable ever existed. Further, no payments were ever received by Vista on the note receivable.

Seymour should have refused to permit the recognition of income from this purported "sale" of marketing rights. Instead, he agreed to permit Vista to recognize income from this transaction in a departure from GAAP.

b) Fictitious product sales

For the year ended September 1994, Vista reported $771,678 of net sales, of which $635,000 or 82% were fictitious. The fictitious sales consisted of transactions with entities that either did not exist or denied ever purchasing or paying for the goods purportedly shipped.

Seymour failed to conduct any meaningful audit procedures to verify whether the sales were legitimate. Seymour failed to review purchase/sales orders, invoices, shipping documents, and cash receipts related to these purported sales. Had Seymour done so, he would have discovered that these were fictitious transactions. For example, no written purchase orders existed for some of the "sales." For other "sales," invoices listed neither a billing nor shipping address.

Seymour violated the due professional care standards of GAAS in the performance of his audit and the preparation of his audit opinion, and when he failed to exercise professional skepticism during his audit. (See AU §316, Consideration of Fraud in a Financial Statement Audit and AU §230, Due Professional Care in the Performance of Work). Seymour knew or was reckless in not knowing that the PMI transaction and product sales were fictitious and had not been recorded in conformity with GAAP. Seymour was reckless and in violation of GAAS because he issued his audit opinion when he lacked sufficient competent evidential matter to verify the existence and validity of the fictitious transactions. (See AU §326, Evidential Matter). Seymour violated the reporting standards of GAAS when he issued an unqualified audit opinion which falsely stated that his firm had conducted its audit in accordance with GAAS and that Vista's financial statements had been prepared in conformity with GAAP (see AU §410, Adherence to Generally Accepted Accounting Principles, AU §411, The Meaning of "Present Fairly in Conformity With GAAP", and Rule 2-02(b) of Regulation S-X, Accountants' Reports, 17 C.F.R. 210.2-02(b)).

By deficiently conducting his audit, Seymour caused his firm's representations in Vista's 1994 Form 10-KSB that the audit was conducted by independent auditors in accordance with GAAS and that Vista's financial statements had been prepared in conformity with GAAP to be false.

D. VIOLATIONS OF THE FEDERAL SECURITIES LAWS

Section 13(a) of the Exchange Act and Rule 13a-1 thereunder require certain issuers to file with the Commission annual reports containing financial statements prepared in conformity with the requirements of the Commission's rules and regulations. In addition, Section 13(a)(2) of the Exchange Act requires that such reports be certified if required by the rules and regulations of the Commission by independent public accountants. The requirement that an issuer file reports under Section 13(a) embodies the requirement that such reports be true and correct. SEC v. IMC International, Inc., 384 F. Supp. 889, 893 (N.D. Texas), aff'd, 505 F.2d 733 (5th Cir. 1974), cert. denied sub nom., Evans v. SEC, 420 U.S. 930 (1975). Because there is no scienter element involved in these provisions, see generally, SEC v. Wills, 472 F.Supp. 1250, 1268 (D.D.C. 1978), a violation occurs when a materially false statement is filed. SEC v. Kalvex, Inc., 425 F. Supp. 310, 316 (S.D.N.Y. 1975).

Seymour caused Vista to violate Section 13(a) of the Exchange Act and Rule 13a-1 thereunder by certifying Vista's 1994 annual financial statements when he, through his firm, was not independent and when he knew or was reckless in not knowing that Vista's financial statements did not comply with GAAP. Seymour failed to conduct his audit of Vista's 1994 annual financial statements in accordance with GAAS when he violated the independence, reporting, due professional care, evidential matter, and predecessor auditor communication standards as discussed above.

The Commission may enter an order of disgorgement including reasonable interest in cease and desist proceedings brought under Section 21C of the Exchange Act. See In the Matter of Sky Scientific Inc., Initial Decision Rel. No. 137 (Mar. 5, 1999), 69 SEC Docket 991; In the Matter of John Thorn, Securities Act Rel. No. 7633 (Mar. 31, 1999), 69 SEC Docket 1266. Here, the audit report issued by Seymour and his firm was false in that it represented that the audit was conducted in accordance with GAAS by independent auditors and that Vista's financial statements were prepared in conformity with GAAP. Seymour should disgorge his audit fees because the work he performed did not qualify as an audit under GAAS and provided no usable service to Vista.

IV.

Based on the foregoing, the Commission finds that Seymour was a cause of Vista's violations of Section 13(a) of the Exchange Act and Rule 13a-1 thereunder.

V.

In view of the foregoing, the Commission deems it appropriate to accept Seymour's Offer.

IT IS ORDERED, pursuant to Section 21C of the Exchange Act that Seymour cease and desist from causing any violation and any future violation of Section 13(a) of the Exchange Act and Rule 13a-1 thereunder.

IT IS FURTHERED ORDERED, pursuant to Section 21C(e) of the Exchange Act that Seymour shall pay disgorgement and prejudgment interest in the total amount of $16,141.49, plus postjudgment interest thereon pursuant to Rule 600(b) of the Commission's Rules of Practice, to the United States Treasury. Such amount shall be paid as follows: $5,380.50 within thirty (30) days from the date of the entry of this order, $5,380.50 plus postjudgment interest thereon within one hundred twenty (120) days from the date of the entry of this order, and $5,380.49 plus postjudgment interest thereon within one hundred eighty (180) days from the date of the entry of this order. Each payment shall be: (A) made by United States postal money order, certified check, bank cashier's check or bank money order; (B) made payable to the U.S. Securities and Exchange Commission; (C) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and

(D) submitted under cover letter that identifies Seymour as a Respondent in these proceedings, the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Richard P. Murphy, Securities and Exchange Commission, 3475 Lenox Road, Suite 1000, Atlanta, Georgia 30326-1232.

By the Commission.

Jonathan G. Katz
Secretary

Footnotes

¹ The findings herein are made pursuant to Seymour's Offer and are not binding on any other person or entity named in this or any other proceeding.

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