21 FEB 2024 / PEOPLE UPDATES

PCAOB Sanctions Four Audit Firms for Communication Violations

- MYCPE ONE Insights Team

Summary

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The Public Company Accounting Oversight Board (PCAOB) has sanctioned four audit firms, namely Baker Tilly US, Grant Thornton Bharat, Mazars USA, and SW Audit due to violations concerning communications with audit committees. Each firm received a formal censure and fines from $30,000 to $45,000, and they are now required to Implement remedial measures to ensure compliance with PCAOB rules and standards.

PCAOB Sanctions Four Audit Firms for Violations Related to Audit Committee Communications

The Public Company Accounting Oversight Board (PCAOB) has sanctioned four audit firms for failing to adhere to PCAOB rules and standards concerning communications with audit committees. This action is part of an ongoing initiative to ensure that audit committees receive essential information to oversee the audit process effectively.

Details of the Sanctions

The PCAOB imposed the following sanctions on the four audit firms:

Censures: Each firm received a formal censure.
Civil Money Penalties: Fines ranging from $30,000 to $45,000 were levied against each firm.
Remedial Measures: Firms are required to implement remedial actions, including enhancing policies and procedures to ensure compliance with PCAOB rules and standards related to audit committee communications.

Firms Sanctioned

The following audit firms were sanctioned:

Baker Tilly US: Failed to comply with communication requirements outlined in AS 1301, Communications with Audit Committees.
Grant Thornton Bharat (India): Violated PCAOB rules by neglecting to ensure that the audit committee received management’s representation letter.
Mazars USA: Did not adhere to the required communication standards with audit committees.
SW Audit (Australia): Failed to satisfy independence requirements and did not obtain audit committee pre-approval for certain services, violating PCAOB Rule 3520, Auditor Independence, and PCAOB Rule 3524, Audit Committee Pre-Approval of Certain Tax Services.

PCAOB's Statement

PCAOB Chair Erica Y. Williams emphasized the importance of effective communication between auditors and audit committees, stating, "Engaged and informed audit committees play a key role in promoting audit quality and protecting investors, and they must be kept informed of all significant matters related to the audit."

This enforcement action underscores the PCAOB's commitment to upholding high standards in the auditing profession and ensuring that audit committees receive the necessary information to oversee the audit process effectively.

Until next time…

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