PCAOB Sanctions Barzily & Co. Certified Public Accountants for Violations of Quality Control Rules and Standards, Among Others
PCAOB fines the firm $50,000 and requires it to retain an independent consultant to improve quality control
The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order sanctioning Israel-based Barzily & Co. Certified Public Accountants (“Barzily & Co.” or the “firm”) for violations of various PCAOB rules and standards.
Specifically, the PCAOB found that Barzily & Co. violated PCAOB quality control (QC) standards during the time it conducted its fiscal year-end 2017 to 2021 audits, because the firm’s QC policies and procedures failed to provide reasonable assurance that firm personnel would comply with PCAOB standards and regulatory requirements. As a result of the firm’s inadequate QC system, the firm:
- Failed to timely file five Form APs for issuer audits, in violation of PCAOB Rule 3211, Auditor Reporting of Certain Audit Participants;
- Failed to comply with certain requirements pertaining to audit committee pre-approval of tax services in three audits, in violation of PCAOB Rule 3524, Audit Committee Pre-approval of Certain Tax Services;
- Failed to disclose in one audit report that there were no critical audit matters, in violation of PCAOB Auditing Standard 3101, The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion; and
- Failed to adequately document certain aspects of two audits, in violation of various PCAOB rules and auditing standards.
“This order underscores that an effective system of quality control is fundamental to performing audits in accordance with PCAOB rules and standards,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations. “Registered firms need to dedicate appropriate resources to develop, monitor, and maintain policies and procedures that provide reasonable assurance that personnel meet all applicable professional standards and regulatory requirements –including new and amended PCAOB rules and standards. In this case, the firm failed to do so.”
Without admitting or denying the findings, the firm settled with the PCAOB and consented to a disciplinary order. The order censures Barzily & Co., requires the firm to undertake certain remedial measures with respect to its QC policies and procedures, and imposes a $50,000 civil money penalty on the firm.
As part of the remedial undertakings, Barzily & Co. is required to retain an independent consultant to review and make recommendations concerning the firm’s policies and procedures regarding its QC system. At a later date, the independent consultant will also conduct a second review to verify the implementation of the recommended changes and to assess their effectiveness.
PCAOB enforcement staff members Joshua M. Cutler and Tina Bell conducted the investigation. Kyra C. Armstrong and Raymond J. Hamm supervised this matter.
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.
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, including compliance reports filed pursuant to federal securities laws.
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