PCAOB Sanctions PwC Singapore for Violations of PCAOB Rules and Quality Control Standards

The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order sanctioning PricewaterhouseCoopers LLP (“PwC Singapore” or the “Firm”) for violations of PCAOB rules and quality control standards. The violations arose from the Firm’s failure to have appropriate policies and procedures over its Personal Independence Compliance Testing (PICT) process and to foster an appropriate ethical culture within its Independence Office.

Over a nearly two-year period, personnel in PwC Singapore’s Independence Office developed and implemented various methods to understate the rates at which Firm personnel failed to properly or timely report their financial interests and relationships. These methods involved misclassifying certain of those failures – known as PICT exceptions – as self-reported. As a result, on two separate occasions the Firm provided understated PICT exception rates to the PCAOB as part of its remediation of prior PCAOB inspection findings.

The PCAOB found that Firm leadership’s focus on achieving a targeted PICT exception rate, combined with a lack of appropriate PICT-related policies and procedures and related controls, enabled the Independence Office’s misconduct. The PCAOB also found that the Firm failed to give appropriate consideration to the assignment of quality control responsibilities when selecting the individual it appointed as its Partner Responsible for Independence.

“It is imperative that firms maintain an appropriate ethical culture in all aspects of their system of quality control,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations (DEI). “Firms must properly monitor and report on compliance with their independence-related policies and procedures to ensure the Board and investors have accurate information.”

Without admitting or denying the Board’s findings, PwC Singapore consented to the PCAOB’s order, which censured the Firm and imposed a $1.5 million civil money penalty. PwC Singapore is also required to undertake certain remedial measures to establish, revise, or supplement, as necessary, policies and procedures, including monitoring procedures, related to the Firm’s independence processes.

PCAOB enforcement staff members Jennifer Gibbons, Godfrey Pinn, and K Lynn Dunston 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.

*****

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.