PCAOB Sanctions PwC Australia for Violations Related to Reporting and Quality Control Monitoring Requirements

The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order sanctioning PricewaterhouseCoopers LLP (“PwC Australia” or the “Firm”) for violations of PCAOB rules and quality control standards. Specifically, the sanctions address the Firm’s failure to timely report the initiation and conclusion of proceedings against the Firm by the Australian Tax Practitioners Board (TPB).

The TPB proceedings related to failures on the part of the Firm to properly manage conflicts of interest that arose from the participation of certain partners in confidential consultations with the Australian government, and concerns that confidential information was impermissibly shared by certain partners with others, including existing and prospective clients. PCAOB Rule 2203, Special Reports, requires registered public accounting firms to file Form 3s to disclose reportable events, including the initiation and conclusion of disciplinary proceedings against the firm, no later than thirty days after the occurrence of the event.

The PCAOB found that PwC Australia did not timely disclose on PCAOB Form 3 the TPB proceedings and that the Firm failed to properly monitor compliance with its quality control policies and procedures that were meant to provide reasonable assurance that the Firm met its Form 3 reporting requirements.

“Failure to disclose required information is not acceptable, and the PCAOB will hold firms accountable,” said PCAOB Chair Erica Y. Williams.

As detailed in the order, the Firm’s then-Chief Executive Officer, members of the Firm’s Office of General Counsel, members of the Firm’s Strategy, Risk, and Reputation Group, and members of the Firm’s Financial Advisory Services practice were aware of the TPB investigation as early as March 2021 and related proceedings as early as February 2022. They also participated in preparing the Firm’s responses to the TPB, yet none of the personnel involved shared information about the proceedings with those at the Firm responsible for Form 3 reporting compliance. Indeed, the individuals responsible for Form 3 reporting learned of the proceedings only after reading about them in the press in early May 2023. Even then, the Firm failed to file mandatory Form 3s until June 20, 2023.

The PCAOB also found that the Firm’s quality control monitoring processes failed to identify the siloed nature of the Firm’s primary practice areas and the impact it might have on the Firm’s compliance with the Firm’s PCAOB reporting requirements. The Firm’s monitoring process further failed to:

• Timely identify necessary corrective actions and improvements to be made in the Firm’s system of quality control;
• Communicate to appropriate Firm personnel any weaknesses in the quality control system or in the level of understanding or compliance therewith; and
• Follow up with appropriate firm personnel to ensure that any necessary modifications were made to the quality control policies and procedures in a timely manner.

“Contemporaneous reporting of Form 3 events is an important part of the PCAOB regulatory framework designed to protect investors.” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations.

Without admitting or denying the Board’s findings, PwC Australia consented to the PCAOB’s order, which censured the Firm and imposed a $600,000 civil money penalty. PwC Australia is also required to undertake certain remedial measures to establish, revise, or supplement, as necessary, policies and procedures, including monitoring procedures, to provide the Firm with reasonable assurance that (a) personnel comply with the Firm’s policies and procedures related to compliance with Form 3 reporting requirements and (b) those policies and procedures related to compliance with Form 3 reporting requirements are suitably designed and are being effectively applied.

PCAOB enforcement staff members Jennifer Gibbons and Dave Eccard conducted the investigation, supervised by William Ryan and John Abell.

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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