Plano, TX-based accounting firm SS Accounting and Auditing Inc. and partner Saima Sayani were fined a total of $65,000 by the Public Company Accounting Oversight Board on Jan. 15 for committing several failures on the audits of China Green Agriculture Inc. and for violating PCAOB quality control standards.
The audit regulator also found that Sayani, a CPA and SS Accounting and Auditing’s sole owner, directly and substantially contributed to her firm’s quality control violations.
“The misconduct in this matter presented significant risks to investors, including failing over two years to obtain sufficient appropriate audit evidence supporting the audit opinion on a public company’s financial statements,” PCAOB Chair Erica Williams said in a statement. “When auditors put investors at risk, the PCAOB will take enforcement actions to hold those auditors accountable.”
SS Accounting and Auditing issued audit reports containing unqualified opinions on China Green’s 2021 and 2022 financial statements on Oct. 13, 2021, and Nov. 10, 2022, respectively.
Headquartered in the People’s Republic of China, China Green’s public filings disclose that it’s a producer and seller of various types of fertilizers and agricultural products through wholly owned Chinese subsidiaries and variable interest entities, including Jinong Shaanxi TechTeam Jinong Humic Acid Product Co. Ltd., Beijing Gufeng Chemical Products Co. Ltd., and Xi’an Hu County Yuxing Agriculture Technology Development Co. Ltd.
According to the PCAOB, the violations committed by SS Accounting and Auditing and Sayani include:
- Failing to obtain sufficient appropriate audit evidence and to perform sufficient audit procedures for multiple significant accounts, including revenue and inventory;
- Failing to perform sufficient audit procedures to test journal entries in response to the risk of fraud;
- Failing to make certain required audit committee communications;
- Failing to determine critical audit matters; and
- Failing to identify significant findings and issues in an engagement completion document.
In addition, the PCAOB found that SS Accounting and Auditing’s system of quality control failed to provide reasonable assurance that the work performed by the firm’s engagement personnel would meet applicable professional standards and regulatory requirements, and the firm failed to conduct any monitoring of its quality control system.
Without admitting or denying the findings, Sayani and her firm consented to the PCAOB’s order, which:
- Censures both SS Accounting and Auditing and Sayani and imposes a joint $65,000 civil money penalty upon them;
- Revokes the firm’s registration with a right to reapply after two years;
- Bars Sayani from associating with a registered public accounting firm, with a right to petition the PCAOB to terminate her bar after two years;
- Requires SS Accounting and Auditing to undertake remedial actions to improve its system of quality control before reapplying for registration; and
- Requires Sayani to complete 50 hours of additional continuing professional education and training before seeking to terminate her bar.
“The firm and its partner violated PCAOB standards in the conduct of the audits and failed to implement quality control policies and procedures to safeguard against these violations. The sanctions imposed by the board on the respondents reflect the seriousness of those failures,” said Robert Rice, director of the PCAOB’s Division of Enforcement and Investigations.
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Tags: Accounting, Audit Standards, Auditing, PCAOB
