PCAOB Sanctions Firm and Partner for Violating PCAOB Rules and Quality Control Standards
PCAOB fines parties and limits former partner’s activities
The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order sanctioning Hall & Company Certified Public Accountants & Consultants, Inc. (“ Hall & Co.”) and Anthony J. Price, CPA (“Price”) for violations of PCAOB rules and quality control standards. The PCAOB also found that Price, the partner in charge of Hall & Co.’s audit department and responsible for quality control, directly and substantially contributed to the firm’s violations.
"Having appropriate quality control policies and procedures in place is essential to producing quality audits. If firms cannot reasonably expect to complete audits with professional competence, they should not undertake those engagements in the first place,” said Mark A. Adler, Acting Director of the PCAOB’s Division of Enforcement and Investigations.
The PCAOB found that Hall & Co.’s system of quality control did not provide reasonable assurance that:
- The firm undertook only audits it could reasonably expect to be completed with professional competence;
- Work was assigned to personnel having the appropriate degree of technical training and proficiency; and
- The work performed by engagement personnel met applicable professional standards.
These failures were evident in the firm’s audit of the 2017 financial statements of The Crypto Company, a public company for which cryptocurrency investment and trading were significant parts of both assets and revenue. Among other things, the firm undertook the 2017 audit without appropriately considering the risks. Hall & Co. also failed to staff the audit with personnel having appropriate experience in auditing companies with substantial cryptocurrency assets.
Without admitting or denying the findings, Hall & Co. and Price settled with the PCAOB and consented to a disciplinary order. Hall & Co.’s penalty in this settlement would have been $150,000, but the PCAOB imposed the lesser penalty based on this firm’s ability to pay and the fact that the firm ceased operations as of December 31, 2020. Therefore, the order imposes a $30,000 civil money penalty on Hall & Co. and requires the firm, which was allowed to withdraw from Board registration, to undertake certain remedial measures, should the firm submit a future registration application. These measures include establishing quality control policies and procedures to give the firm reasonable assurance that issuer audits and reviews are conducted in accordance with applicable professional standards.
The order imposes a $25,000 civil money penalty on Price and limits his activities for two years by prohibiting him from administering a registered firm’s system of quality control, including responsibilities for the design and maintenance of its policies and procedures.
PCAOB enforcement staff members R. Davis Taylor, Stefan Hagerup, Elliott Mogul, and David Eccard conducted the investigation. Kyra Armstrong and Raymond 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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