PCAOB Sanctions RAM Associates & Company LLC and Owner for Quality Control and Other Violations
PCAOB fines parties $150,000, revokes the firm’s registration, and bars partner
The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order sanctioning RAM Associates & Company LLC (“the firm”) and Parameswara K. Ramachandran (“Ramachandran”) for violations of PCAOB rules and standards in connection with multiple audits of two issuer clients, as well as violations of quality control standards. The PCAOB also found that Ramachandran, the firm’s sole owner and engagement partner on the audits, directly and substantially contributed to the firm’s violations.
“Firms that repeatedly violate PCAOB standards and rules will face serious consequences,” said PCAOB Chair Erica Y. Williams. “The PCAOB will not back down from rigorous enforcement that protects investors and promotes audit quality.”
As described in the order, the firm and Ramachandran:
- Failed to obtain sufficient appropriate audit evidence in auditing the valuation of an issuer’s goodwill and using the work of a specialist in two audits;
- Failed to timely assemble for retention a complete and final set of audit documentation for two audits;
- Failed to communicate all required matters to an issuer’s audit committee for two audits; and
- Failed to obtain an issuer’s audit committee pre-approval for tax services.
Additionally, according to the order, the firm failed to (1) ensure two audits had engagement quality reviews performed and documented in accordance with PCAOB standards and (2) timely file five Form APs.
The PCAOB also found that the firm’s system of quality control failed to provide reasonable assurance that the firm would comply with PCAOB standards regarding engagement quality reviews, timely assemble complete and final sets of audit documentation, and sufficiently monitor the effectiveness of the design and implementation of its system of quality control.
“This order highlights the importance of following PCAOB standards when evaluating critical accounting estimates such as goodwill, and the steps auditors must take when using the work of a specialist,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations.
Without admitting or denying the findings, the firm and Ramachandran settled with the PCAOB and consented to a disciplinary order. The order censures the firm and Ramachandran and imposes a $150,000 civil money penalty on the firm and Ramachandran jointly and severally. In addition, the order revokes the firm’s registration and bars Ramachandran from being an associated person of a registered public accounting firm. The firm may reapply for registration, and Ramachandran may petition to terminate his bar, after two years from the date of the order. The firm is required to undertake certain remedial measures, should it 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.
PCAOB enforcement staff members Elliott C. Mogul, Laura Voisin, and Tima Hawes conducted the investigation. Kyra C. Armstrong 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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