PCAOB Sanctions Audit Firm and Its Sole Partner for Violations of PCAOB Rules and Standards in Multiple Issuer Audits

The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order sanctioning Israel-based Halperin Ilanit CPA (the “Firm”) for violations of (1) PCAOB rules and standards in connection with five audits of three issuer clients and (2) violations of quality control standards. The PCAOB also found that Ilanit Halperin (“Halperin”), the Firm’s owner and only partner, directly and substantially contributed to the Firm’s violations. She also violated PCAOB rules and standards in her role as engagement partner on those audits. The violations committed by the Firm and Halperin include the following:

• Failing to obtain engagement quality reviews;
• Failing to obtain sufficient appropriate audit evidence in auditing the valuation of significant accounts;
• Failing to make required audit committee communications;
• Failing to assemble a complete set of audit documentation for one audit and improperly adding late information to the work papers for two audits; and
• Failing to file Form 2s and Form APs – some of which also contained inaccurate information – by the applicable deadlines.

As reflected by the multitude of violations spanning several issuer audits, the Firm’s system of quality control failed to provide the Firm with reasonable assurance that work performed by its personnel would meet applicable standards and, therefore, violated PCAOB quality control standards.

“Deficient quality control systems put investors at risk,” said PCAOB Chair Erica Y. Williams. “Firms that don’t take quality control seriously should expect to face accountability from the PCAOB.”

“The extent and, in some cases, severity of the violations committed by the respondents in this matter reflect a blatant disregard of PCAOB rules and standards that warrants the sanctions imposed by the order,” said Robert E. Rice, PCAOB Director of Enforcement and Investigations.

Without admitting or denying the findings, Halperin and the Firm consented to the PCAOB’s order against them. The order censures both respondents and imposes a $200,000 civil money penalty, jointly and severally, against them. It also revokes the Firm’s registration with a right to reapply after three years and bars Halperin with a right to petition the Board to terminate her bar after three years. Finally, the order requires the Firm to improve its system of quality control prior to reapplying for registration and requires Halperin to complete additional continuing professional education prior to petitioning the Board to terminate her bar.

PCAOB enforcement staff members Brett Collings, Michelle Jaconski, Dillon Fitzgerald, and Thomas Barry conducted the investigation, supervised by C. Ian Anderson and Stephen D’Angelo.

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.

Contact

PCAOB Office of Communications and Engagement
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