PCAOB Sanctions Three Firms for Failing to Make Required Disclosures
The PCAOB imposes censures, $110,000 in total fines, and remedial undertakings on three firms that violated PCAOB reporting requirements.
The Public Company Accounting Oversight Board (PCAOB) today announced settled disciplinary orders sanctioning three firms for failing to report – or to report within the required timeframe – key information to the PCAOB. Specifically, the firms did not properly disclose on PCAOB Form 3 certain events, including the firms being the subject of certain administrative or disciplinary proceedings and certain restrictions on one firm’s authorization to engage in the business of auditing or accounting.
“The Board is vigilantly monitoring registered firms’ compliance with Form 3 reporting, which provides important information for investors,” said PCAOB Chair Erica Y. Williams. “We take especially seriously repeat violations by firms that have already been required to address deficiencies in their PCAOB reporting process.”
The firms, without admitting or denying the findings, consented to the PCAOB’s orders and disciplinary actions. The firms (and sanctions imposed) are the following:
Da Hua CPAs (Special General Partnership), headquartered in Beijing, China – $50,000 civil money penalty, censure, and requirement to review and certify its PCAOB reporting policies and procedures.
Guney Bagimsiz Denetim Ve Serbest Muhasebeci Mali Musavirlik A.S., headquartered in Istanbul, Turkey – $25,000 civil money penalty, censure, and requirement to comply with already-revised policies and procedures concerning the firm’s PCAOB reporting.
Manning Elliott LLP, headquartered in Vancouver, Canada – $35,000 civil money penalty, censure, and requirement to improve policies and procedures concerning PCAOB reporting.
“The public interest is best served by contemporaneous reporting of events covered by Form 3,” said Robert E. Rice, PCAOB Director of Enforcement and Investigations (DEI). “Clear and timely communication of reportable events is vital to the PCAOB’s mission of investor protection and oversight of registered firms.”
One of the firms, Da Hua, was previously sanctioned by the Board in 2020 for failing to report certain disciplinary proceedings on Form 3. Despite that order – and the imposition in it of an undertaking requiring Da Hua to improve its PCAOB reporting process – the firm again failed to properly report foreign disciplinary proceedings on Form 3, which demonstrates an ongoing quality control deficiency. Accordingly, the order also finds the firm violated quality control standards. The undertakings ordered for Da Hua include a requirement that the firm provide a written report to DEI, either justifying the firm’s decision not to supplement or modify its quality control over PCAOB reporting, or providing a narrative description of changes Da Hua will make to those policies and procedures followed by a certification that those changes have been implemented, with supporting evidence.
PCAOB enforcement staff member Brett Collings conducted the investigations, 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.
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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