PCAOB Sanctions Five Auditors for Independence and Other Violations
The Public Company Accounting Oversight Board today announced settled disciplinary orders sanctioning five current and former partners and employees of L.L. Bradford & Company, LLC and Samyn & Martin, LLC, PCAOB-registered public accounting firms based, respectively, in Las Vegas, Nevada, and Kansas City, Missouri.
The Board sanctioned four individuals for, among other things, violating auditor independence requirements. The Board also sanctioned another individual for failing to appropriately plan and perform the audit of a public company.
"These orders reinforce the principle that independence is the bedrock of auditor objectivity," said Claudius B. Modesti, Director of PCAOB Enforcement and Investigations. "Investors rely on auditors being independent of their public audit clients in both fact and appearance."
1. Audit Partner Rotation and Cooling-Off Violations: In one order, the Board found that Dustin M. Lewis and Eric S. Bullinger, while partners at L.L. Bradford & Company, violated audit partner rotation requirements with respect to the audits and reviews of six public companies. The Board also found that, in violation of PCAOB standards that require a two-year "cooling off" period, Bullinger served as the engagement quality reviewer immediately after serving as engagement partner for the audits of two public companies. The Board further found that, on another audit, Lewis failed to perform his engagement quality review in accordance with PCAOB standards.
The Board censured Lewis, barred him from associating with a PCAOB-registered public accounting firm, with the right to petition to remove the bar after two years, and imposed a $10,000 civil money penalty against him. The Board censured Bullinger and barred him from associating with a PCAOB-registered public accounting firm, with the right to petition to remove the bar after one year.
2. Providing Bookkeeping and Auditing Services to the Same Client: In a second order, the Board found that Suzanne M. Herring violated independence requirements by providing bookkeeping services, financial statement preparation services, and valuation services to two public company audit clients for which she also served on the audit engagement teams at Samyn & Martin. In addition, the Board found that Herring, while at L.L. Bradford & Company, directly and substantially contributed to the violation of independence requirements concerning the provision of prohibited non-audit services with respect to a public company audit client.
The Board censured Herring, barred her from associating with a PCAOB-registered public accounting firm, with the right to petition to remove the bar after two years, and imposed a $5,000 civil money penalty against her.
3. Contributing to Independence-Related Quality Control Violations: In a third order, the Board found that Hazel-Leilani De Los Reyes Bradford, while a partner at L.L. Bradford & Company, directly and substantially contributed to violations of PCAOB quality control standards related to providing sufficient assurance of compliance with independence requirements. The Board found that Ms. Bradford assumed the role of quality control partner at the firm despite a lack of public company audit experience and an inadequate knowledge of PCAOB standards and relevant SEC rules and regulations.
The Board censured Ms. Bradford, barred her from associating with a PCAOB-registered public accounting firm, with the right to petition to remove the bar after two years, and imposed a $25,000 civil money penalty against her.
4. Auditing Failures: In a fourth order, the Board found that Gordon Brad Beckstead, in his role as engagement partner on an L.L. Bradford & Company audit of a public company, violated PCAOB standards in multiple respects. Among other things, he failed to properly plan the audit, appropriately assess risks, evaluate the qualifications and competence of a specialist, perform sufficient audit procedures to assess the reasonableness of assumptions used by the specialist, and appropriately test the company's reported revenue.
The Board suspended Beckstead from associating with a PCAOB-registered public accounting firm for one year, and limited the activities that he may perform in connection with public company audits for one additional year. The Board also censured Beckstead and required him to complete professional education courses related to public company audits.
Respondents each consented to the respective orders without admitting or denying the Board's findings. Such findings were made pursuant to respondents' offers of settlement and are not binding on any other persons or entities in these proceedings or in any other proceeding.
The PCAOB investigation was conducted by PCAOB Enforcement staff members Jennifer Gibbons, Michael Steele, and Bryant Coleman.
PCAOB Release Nos. 105-2015-005 In the Matter of Dustin M. Lewis, CPA, and Eric S. Bullinger, CPA, 105-2015-006 In the Matter of Hazel-Leilani De Los Reyes Bradford, 105-2015-007 In the Matter of Gordon Brad Beckstead, CPA, and 105-2015-008 In the Matter of Suzanne M. Herring are available on the PCAOB website.