Enforcement Spotlight: Improper Alteration of Audit Documentation

In the past several years, the Board has sanctioned firms and individuals for improperly deleting, adding, or altering audit documentation.

Enforcement staff recently uncovered evidence of additional instances of similar auditor misconduct at a range of firms, including firms affiliated with global networks. Addressing these matters is a higher priority for the Enforcement Division.

On April 21, 2016, the PCAOB issued Staff Audit Practice Alert No. 14, Improper Alteration of Audit Documentation, which reflects PCAOB staff concerns about auditors improperly altering audit documentation in connection with a PCAOB inspection or investigation. 

PCAOB Enforcement has zero tolerance for improper alteration of audit documentation in connection with a Board inspection or investigation. Investors, relying on audit opinions, should not have to tolerate auditors improperly altering their audit files risking that the actual quality of the audit is being obscured.

 Claudius Modesti, Director of Enforcement and Investigations

Registered firms and associated persons should be aware that failure to cooperate with a Board inspection or investigation can result in a PCAOB disciplinary action and the imposition of significant sanctions.

To date, the Board has issued 33 disciplinary orders for failure to cooperate with inspections, as well as 28 disciplinary orders for failure to cooperate with a Board investigation or for substantially contributing to a firm's failure to cooperate with a Board investigation.

A majority of those orders included improper document alteration. Through those orders, the Board has revoked the PCAOB registration of 18 firms and has sanctioned 53 individuals, including barring 45 individuals and suspending two others from further association with a registered firm. 

Links to several of the orders can be found below: