PCAOB Sanctions Five Firms for Failing To Comply With PCAOB Reporting Requirements

The Public Company Accounting Oversight Board (PCAOB) today announced settled disciplinary orders sanctioning five audit firms for violating PCAOB rules related to required reporting. The firms are the following: Bush & Associates CPA LLC (“Bush”), Barton CPA PLLC (“Barton”), Crowe Hussain Chaudhury & Co. (“Crowe”), B S R & Co. LLP (“KPMG India”), and RSM Brasil Auditores Independentes Sociedade Simples (“RSM Brazil”).

“Failures to make required disclosures undercut the PCAOB’s ability to protect investors, and firms must not take these obligations lightly,” said PCAOB Chair Erica Y. Williams.

Pursuant to PCAOB Rule 3211, Auditor Reporting of Certain Audit Participants, a firm must file a Form AP within a specified time after an audit report issued by the firm is included in a document filed with the U.S. Securities and Exchange Commission. The PCAOB adopted the rule in 2015 to improve transparency for investors and others regarding the engagement partner and other accounting firms that took part in the audit.

Barton failed to file multiple required Form APs within the specified time frame. Bush and Crowe failed entirely to file multiple required Form APs until notified of that delinquency by PCAOB staff.

PCAOB Rule 2203, Special Reports, requires registered firms to file a Form 3 disclosing certain reportable events listed in that form within 30 days of the occurrence of those events. These events include the initiation of certain criminal, regulatory, administrative, or disciplinary proceedings against a firm or its personnel. When the Board imposed this requirement in 2008, it recognized that this type of information should be timely reported so that staff can determine if the information merits follow-up. Timely reporting also enables investors to determine if registered firms and/or their personnel are subject to the types of proceedings within the scope of Form 3.

KPMG India and RSM Brazil both failed to timely report the initiation of multiple disciplinary proceedings brought against those firms (and, in the case of KPMG India, its personnel) by local regulators.

The violations by Bush, Barton, and Crowe were identified through a sweep, which the PCAOB uses to collect information on potential violations from several firms at the same time. The violations by KPMG India and RSM Brazil were identified through regular monitoring the PCAOB conducts of registered firms’ compliance with Form 3 reporting requirements.

“Sweeps are a critical aspect of the PCAOB enforcement program. We will continue to use sweeps – and ongoing monitoring – to identify firms that fail to comply with PCAOB reporting requirements,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations.

Without admitting or denying the findings, all five firms consented to their respective orders, which censure the firms and impose civil money penalties of $50,000 on Bush and $25,000 on Barton, Crowe, KPMG India, and RSM Brazil each. The orders also require each of the firms to undertake remedial measures to improve their policies and procedures concerning compliance with PCAOB reporting.

PCAOB enforcement staff member Sina Mansouri conducted the investigation into Barton, Bush, and Crowe, supervised by William Ryan and John Abell. PCAOB enforcement staff members Brett Collings and Samantha Parker conducted the investigation into KPMG India and RSM Brazil, supervised by C. Ian Anderson.

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.

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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.

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PCAOB Office of Communications and Engagement
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