Auditing
PCAOB Doles Out $165,000 in Total Fines to Five Audit Firms
Four firms were caught up in an enforcement sweep, while the fifth firm was sanctioned for failing to timely file PCAOB Form 3.
Sep. 25, 2024
The Public Company Accounting Oversight Board (PCAOB) handed out penalties to four accounting firms—one in the U.S., two in Canada, and one in Switzerland—on Sept. 24 for violating U.S. auditing rules and standards related to communications that firms are required to make to audit committees.
In addition, the audit regulator sanctioned an additional U.S.-based audit firm on Tuesday for violating rules related to required reporting to the PCAOB.
The group of four firms—Tampa, FL-based Accell Audit & Compliance, Vancouver, BC-based Crowe MacKay, the Swiss affiliate of Big Four firm Ernst & Young, and the Canadian arm of top 10 global accounting firm Grant Thornton—were caught up in an enforcement sweep, a practice the PCAOB uses to collect information on potential violations from several firms at the same time.
“The PCAOB will continue to hold firms accountable for providing audit committees, the PCAOB, and the public with important information to help keep investors protected,” PCAOB Chair Erica Williams said in a statement.
The PCAOB said the four firms failed to make certain required communications with audit committees, as required by AS 1301, Communications with Audit Committees, and/or Rule 3524, Audit Committee Pre-approval of Certain Tax Services.
The two Canadian firms, Crowe MacKay and Grant Thornton, also failed to document audit committee pre-approval of certain services, in violation of AS 1215, Audit Documentation. In addition, Accell Audit & Compliance failed to communicate in writing all material weaknesses to a company’s audit committee, in violation of AS 1305, Communications About Control Deficiencies in an Audit of Financial Statements.
The sanctions are as follows:
- Accell Audit & Compliance: $40,000 fine and censure
- Crowe MacKay: $30,000 fine and censure
- Ernst & Young AG: $45,000 fine and censure
- Grant Thornton: $30,000 fine and censure
These four settlements are the result of a continuing PCAOB sweep that led to previous sanctions on four firms in February 2024, three firms in November 2023, and five firms in July 2023.
Wilton, CT-based accounting firm Halpern & Associates got tagged with a $20,000 fine and censure for failing for more than two years to report to the PCAOB on Form 3 the initiation of a disciplinary proceeding brought by the Securities and Exchange Commission against the firm and its namesake partner, Barbara Halpern, violating PCAOB Rule 2203, Special Reports.
PCAOB Rule 2203, Special Reports, requires registered firms to file a Form 3 disclosing certain reportable events listed in that form within 30 days of the occurrence of those events. Two such events are the initiation of various disciplinary proceedings involving a firm and its personnel, as well as the conclusion of such proceedings.
Halpern & Associates’ violation was identified through regular monitoring that the PCAOB conducts of registered firms’ compliance with the requirement to timely report the events listed in Form 3, the board said.
Without admitting or denying the findings, each of the five sanctioned firms consented to its respective PCAOB disciplinary order and fine. In addition, the firms agreed to undertake remedial measures to establish, revise, supplement, or comply with policies and procedures concerning compliance with PCAOB rules and standards related to these violations, the regulator said.
“This latest round of orders shows that firms cannot neglect their responsibilities to keep audit committees informed and report required information to the PCAOB,” said Robert Rice, director of the PCAOB’s Division of Enforcement and Investigations. “The PCAOB will bring disciplinary actions to reinforce the importance of these obligations, as set forth in our rules and standards.”