PCAOB Sanctions Five Firms for Audit Documentation and Disclosure Violations

PCAOB Sanctions Five Firms for Audit Documentation and Disclosure Violations

The Public Company Accounting Oversight Board (PCAOB) has announced disciplinary actions against five audit firms for violations related to audit documentation and disclosure of audit leaders. These sanctions, which include censures, fines totaling $130,000, and remedial undertakings, underscore the PCAOB's commitment to enforcing compliance with its rules and standards.

Audit documentation plays a crucial role in maintaining the integrity of the audit process by providing a written record that supports the representations made in the auditor’s report. Additionally, Form APs serve to disclose the individuals who led specific audits for the firm and any involvement of other firms in those audits.

The sanctions stem from sweeps conducted by the PCAOB, enabling the collection of information on potential violations from multiple firms simultaneously. This strategic approach, initiated in 2022 as part of the PCAOB's enforcement strengthening efforts, allows for a more comprehensive assessment of industry compliance.

PCAOB Chair Erica Y. Williams emphasized the importance of these requirements in safeguarding investor interests, stating, “When firms fail to meet them, the PCAOB won’t hesitate to take action.”

Specifically, the disciplinary actions include:

  1. Audit Documentation Violations:
    • Berkower LLC and Sassetti LLC were found to have failed to assemble a complete and final set of audit documentation within 45 days of the audit report release date, violating AS 1215, Audit Documentation. Each firm faces a $25,000 civil money penalty and censure.
    • Freedman & Goldberg C.P.A.’s, P.C. failed to design and implement appropriate policies and procedures to ensure compliance with AS 1215's requirements. The firm is penalized with a $25,000 civil money penalty and censure.
  2. Disclosure Violations:
    • R. Bolko CPA P.A. and Fontanella Associates LLC CPA & Consulting Firm failed to timely file Form APs, violating PCAOB Rule 3211, Auditor Reporting of Certain Audit Participants. R. Bolko CPA P.A. faces a $30,000 civil money penalty and censure, while Fontanella Associates LLC CPA & Consulting Firm is penalized with a $25,000 civil money penalty and censure.

Without admitting or denying the findings, each firm consented to its respective PCAOB order and disciplinary actions. Furthermore, each firm agreed to undertake remedial measures, including professional education and training concerning compliance with AS 1215, as well as improving policies and procedures related to PCAOB rules and standards.

Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations, emphasized the significance of compliance with PCAOB rules, stating, “The PCAOB will take action to hold firms accountable when they violate them.”

As these sanctions are enforced, the PCAOB reaffirms its commitment to upholding the integrity and reliability of the auditing profession, ensuring adherence to stringent standards that protect the interests of investors and stakeholders alike.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.