TORONTO - The Ontario Securities Commission says BDO Canada LLP paid $4 million after admitting it failed to comply with generally accepted auditing standards in the audits of the 2014 and 2015 financial statements of two privately offered investment funds.

The payments include a $3.5 million administrative penalty and $500,000 towards the costs of the regulator's investigation.

The OSC says the settlement reflects that BDO has enhanced its policies and procedures to prevent similar failures from happening again.

The regulator says it will recommend that $2.5 million of the penalty be allocated to Crystal Wealth Investors through its court-appointed receiver Grant Thornton Ltd.

In April 2017, the Ontario Superior Court of Justice put Crystal Wealth, its investment funds, and their directing mind, Clayton Smith, into receivership.

The commission approved a settlement agreement a year later in which Smith admitted to defrauding investors in the funds whose financial statements were audited by BDO.