A firm issued audit reports on the financial statements of a private mutual fund. A material investment of the fund was impaired, but the carrying value of investment was not written-down in the financial statements to the fair value as required by generally accepted accounting principles. The Firm’s audit work to assess the fair value of the investment was insufficient and was not in accordance with generally accepted auditing standards. The firm’s working papers were inadequate and improperly dated.
The Investigation Committee determined that the Firm contravened the CPABC Code of Professional Conduct as follows:
201.1 - Maintenance of the good reputation of the profession
202.1 - Integrity and due care
205 - False or misleading documents and oral representations
206.1 - Compliance with professional standards
218 - Retention of documentation and working papers
The Committee recommended that:
- The Firm accept a reprimand;
- The Member agrees that their practice licence be permanently cancelled;
- The Member agrees to not re-apply for a practice licence; and
- The Firm pay costs of $2,025.