PCAOB Sanctions Audit Partner for Improperly and Repeatedly Altering Workpapers in Two Inspections and an Investigation

The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order sanctioning Heber Maughan, CPA (“Maughan”) for improperly altering workpapers before providing them (1) to PCAOB inspectors in two inspections and (2) to PCAOB enforcement staff during a related investigation.

“The work of PCAOB inspectors and investigators is critical to investor protection, and our rules make clear that auditors are prohibited from improperly modifying audit documentation in connection with inspections and investigations,” said PCAOB Chair Erica Y. Williams. “To protect investors, the PCAOB will hold auditors accountable when they attempt to thwart PCAOB processes.”

Maughan violated PCAOB Rule 4006, Duty to Cooperate With Inspectors, PCAOB Rule 5110, Noncooperation with an Investigation, and AS 1215, Audit Documentation, by engaging in a pattern of creating, modifying, and backdating workpapers after applicable documentation completion dates and providing them – without disclosing the alterations – to PCAOB staff. He provided improperly altered workpapers for a total of five issuer audits to PCAOB inspectors during 2020 and 2023 inspections of his firm. After PCAOB enforcement staff opened an investigation relating to those inspections, Maughan also provided the investigators with the same five sets of improperly altered audit documentation, as well as improperly altered audit documentation for three additional issuer audits.

When Maughan created and modified workpapers before providing them to inspectors, he did so several months after the documentation completion dates by which those workpapers should have been finally assembled. Moreover, some of his modifications were to apply sign-off dates that inaccurately suggested he had prepared the workpapers during the original audits – and not several months after. The three additional sets of altered documentation that Maughan provided to PCAOB enforcement staff contained newly created workpapers, as well as modifications made more than two years after the documentation completion dates for those audits.

Furthermore, Maughan violated the PCAOB’s ethics rules, as his repeated misconduct constituted violations of his obligation under ET § 102, Integrity and Objectivity, to maintain integrity and not knowingly misrepresent facts.

“The respondent’s conduct was broad in scope, repeated in frequency, and calculated in nature. The Board’s sanctions and charges against him, which include a permanent bar and ethics violations, are entirely warranted,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations.

Without admitting or denying the findings, Maughan consented to the PCAOB’s order. The order censures Maughan; bars him from associating with a PCAOB-registered firm; and imposes on him a $10,000 civil money penalty. Based on Maughan’s conduct, the Board would have imposed a civil money penalty of $75,000 if it had not taken his financial resources into consideration.

PCAOB enforcement staff members Stephen D’Angelo, George P. Choundas, and Ashlie Csaba conducted the investigation, supervised by C. Ian Anderson.

The PCAOB oversees auditors’ compliance with the Sarbanes-Oxley Act, provisions of the securities laws relating to auditing, professional standards, and PCAOB and SEC rules.

Further information about the PCAOB Division of Enforcement and Investigations is available on the PCAOB website. Firms or individuals wishing to report suspected misconduct by auditors, or to self-report possible misconduct, may visit the PCAOB Tips and Referrals page.

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About the PCAOB

The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers registered with the Securities and Exchange Commission, including compliance reports filed pursuant to federal securities laws.

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