Disciplinary proceedings were brought by the Public Company Accounting Oversight Board (PCAOB) in the United States against a Firm and Member when they did not comply with numerous PCAOB rules and standards when conducting the audit of a public company by failing to:
- use an audit methodology designed to comply with PCAOB standards and rules;
- provide technical training to staff;
- perform internal monitoring procedures to properly evaluate the accounting for a significant transaction;
- obtain pre-approval for non-audit services; and
- communicate matters related to the client’s audit committee properly.
PCAOB issued an order that:
- revoked the registration of the Firm for at least five years;
- barred the Member from being associated with a public accounting firm registered with PCAOB for at least five years; and
- imposed a penalty of US$10,000.
The Investigation Committee determined the Firm and Member contravened the CPABC Code of Professional Conduct as follows:
102.3 - Other professional regulatory bodies [Matters to be reported to CPABC]
201.1 - Maintenance of the good reputation of the profession
202.1 - Integrity and due care
203 - Professional competence
205(a) - False or misleading documents and oral representations
501 - Policies and procedures for compliance with professional standards
502(a),(b),(e),(g) - Policies and procedures for the conduct of a practice
Bylaw
511(1)(c) - Obligation to report
The Committee noted the significant penalty the Member and Firm had incurred. The Committee recommended the Firm and Member:
- accept a reprimand;
- pay a fine of $1,500 and
- pay expenses of $2,400.