PCAOB Sanctions Ciro E. Adams, CPA, LLC and Its Engagement Partner for Violations of Audit Standards in Multiple Issuer Audits

The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order sanctioning Ciro E. Adams, CPA, LLC (“the firm”) and its sole partner, Ciro E. Adams, CPA (“Adams”). As described in the order, Adams served as the engagement partner on four audits during which he and the firm relied too heavily on information generated by, and representations from, audit clients, in violation of various PCAOB rules and auditing standards.

“Professional skepticism is critical to high-quality audits and investor protection,” said PCAOB Chair Erica Y. Williams. “Auditors who fail to exercise due professional care and skepticism will face consequences.”

Specifically, the PCAOB found that, among other things, the firm and Adams failed to (1) exercise due professional care and skepticism and (2) obtain sufficient appropriate audit evidence with respect to: 

• Testing revenue during the audits of Professional Diversity Network, Inc. (“PDN”) for 2019 through 2021, 
• Testing a significant acquisition during the 2021 PDN audit, and 
• Testing notes receivable and potential related party transactions during the 2020 audit of Alpha Investment Inc.

“This order underscores the diligence with which auditors must test assets and transactions significant to issuers’ financial statements,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations. “These respondents relied too heavily — and sometimes exclusively — on management representations and company-prepared materials.”

Without admitting or denying the findings, the firm and Adams settled with the PCAOB and consented to a disciplinary order which censures both respondents and imposes a $40,000 civil money penalty jointly and severally on the firm and Adams. In addition, the order revokes the firm’s registration and bars Adams from being an associated person of a registered public accounting firm. The firm may reapply for registration, and Adams may petition to terminate his bar, after two years from the date of the order. Finally, the order requires Adams to complete supplemental continuing professional education prior to submitting any petition to terminate his bar.

PCAOB enforcement staff members Brett Collings, Michelle Jaconski, and Thomas Barry conducted the investigation. C. Ian Anderson 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.