PCAOB Sanctions Audit Partner for Multiple Audit Failures in Consecutive Audits and Violation of Partner Rotation Requirements

The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order against Jaslyn Sellers, CPA, in connection with significant audit failures in her role as engagement partner in consecutive audits of issuer NetSol Technologies, Inc. for the fiscal years ended June 30, 2021, and June 30, 2022 (“NTI Audits”). The PCAOB also found that Sellers violated auditor independence requirements by serving as the NTI engagement partner for a sixth consecutive year, beyond applicable partner rotation limits.

“Engagement partners are the first line of defense for investors and the public relying on audited financial statements,” said PCAOB Chair Erica Y. Williams. “Partners who shirk their obligations increase risk in the marketplace and will be held accountable.”

Sellers failed during the NTI Audits to obtain sufficient appropriate audit evidence in multiple areas that she had identified as significant risks, including revenue recognition and accounting estimates. In addition, Sellers authorized the issuance of audit reports for each of the NTI Audits, which identified critical audit matters (CAMs). Those CAMs included descriptions of audit procedures intended to address each CAM, but certain of those procedures were not actually performed.

Sellers also failed to appropriately supervise the NTI Audits and violated U.S. Securities and Exchange Commission and PCAOB independence requirements by serving as the NTI engagement partner for a sixth consecutive year.

“The engagement partner here abrogated her duties to appropriately audit the significant risk areas she identified, failed to abide by partner rotation requirements, and gave investors the impression certain CAMs were addressed when they were not,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations. “Conduct like this puts investors at risk and will not be tolerated.”

Without admitting or denying the findings, Sellers consented to the PCAOB’s order. The order:

• Censures Sellers;
• Bars her from associating with a PCAOB-registered firm, with a right to reapply after two years; and
• Imposes on her a $15,000 civil money penalty. Based on Sellers’ conduct, the PCAOB would have imposed a civil money penalty of $75,000 if it had not taken her financial resources into consideration.

PCAOB enforcement staff members Noah Berlin, Arnold Ramos, and Roosevelt Barros conducted the investigation, supervised by William Ryan and John Abell.

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