The Public Company Accounting Oversight Board has disciplined five auditing firms for violating its rules and standards when communicating with audit committees, part of an overall sweep as the audit overseer ratchets up its enforcement efforts.
The PCAOB has begun using sweeps as part of its overall efforts to bolster enforcement. Three of the sanctioned firms failed to get audit committee pre-approval before offering audit and/or non-audit services to clients. Top 100 Firm BPM LLP, based in San Francisco was hit with a $50,000 penalty and censure, while another Top 100 Firm, Plante & Moran PLLC, based in Southfield Michigan, received a $40,000 penalty and censure. A smaller firm, S. R. Snodgrass, P.C., got a $35,000 penalty and censure. Officials did not immediately respond to requests for comment Friday afternoon.
Two other firms were sanctioned for failing to make and/or document their communications with audit committees about the planned participation of other firms and auditors in an audit. They included Mancera, S.C., based in Mexico City and a member of the EY Global network, received a $40,000 penalty and censure, while MSPC CPAs and Advisors was hit by a $30,000 penalty and censure. MSPC and EY Global did not immediately respond to a request for comment, while Mancera and EY Mexico could not be reached.
Without admitting or denying the findings, each of the firms agreed to the PCAOB’s order and disciplinary action and consented to undertake remedial measures to come into compliance with PCAOB rules and standards.
“Audit committees play a critical role in helping protect investors, and the PCAOB will hold firms accountable for their part in making sure audit committees are appropriately informed,” said PCAOB chair Erica Williams in a statement Friday. “Firms must be vigilant in preserving their independence, and part of that means making sure that services performed for issuer audit clients are pre-approved by their audit committees. At the same time, required disclosures are critical to ensure audit committees have the information they need to effectively oversee the auditor’s work.”