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Recent PCAOB Sanctions on Audit Firms for Audit Failures
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Subscribe27 MAR 2025 / PCAOB UPDATES
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Sometimes the red flags aren’t hidden, they’re practically doing cartwheels in front of you. And yet, this March, some auditors still managed to walk right past them. From a £2.9 million spanking for PwC in the U.K. to back-to-back PCAOB crackdowns in the U.S., regulators are sending a clear message: Whether you’re repping a global giant like PwC or flying solo in your name-branded shop, the standards apply. And when you don’t meet them? The fines hit, the bars drop, and reputations take a nosedive. So, what exactly went wrong in these headline-making cases? And what can today’s audit pros learn before they find themselves in the hot seat? Let’s break it down.
Stateside, the Public Company Accounting Oversight Board (PCAOB) wasn’t playing around. James Pai CPA PLLC and its sole partner, Yu-Ching James Pai, got hit for blowing basic audit duties—twice. The violations? Not performing risk assessments, skipping key procedures like engagement quality reviews, and failing to collect management representation letters. That’s like trying to bake a cake without flour, eggs, or even turning on the oven.
“Performing appropriate risk assessments and obtaining sufficient evidence are fundamental to an audit,” PCAOB Chair Erica Williams emphasized. For these lapses, Pai and his firm were fined $40,000, had their registration revoked, and Pai himself was barred from practicing for three years. He’ll need to complete 40 extra hours of continuing education before he’s even allowed to apply for a comeback.
Then there’s Jaslyn Sellers, CPA, who went full audit-fiction. The PCAOB found that Sellers listed critical audit matters (CAMs) in her reports on NetSol Technologies, but never actually performed the audit procedures she claimed. Even worse? She stuck around as lead partner for six years straight, violating the five-year rotation rule meant to preserve auditor independence.
According to PCAOB Director Robert Rice, “The engagement partner here abrogated her duties, and gave investors the impression certain CAMs were addressed when they were not.” The penalty? A $15,000 fine and a two-year professional time-out. The PCAOB even mentioned the fine would’ve been $75K if not for her financial situation.
Across all these cases, big firm or boutique, the same core problems echo: lack of professional skepticism, failure to follow through, and straight-up neglect of the fundamentals. Cutting corners might speed things up in the short term, but it’ll wreck your rep and bring down regulators like a ton of bricks. This isn’t just about making mistakes, it’s about rebuilding trust. Regulators are stepping up their game. It’s time for the audit world to step up theirs. Want more updates like this? Subscribe to our newsletter for real-talk insights on tax, policy, and the financial stories shaping the future.
Until next time…
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