PCAOB Sanctions U.S. Audit Firm for Violations Related to Communications Between Predecessor and Successor Auditors

The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order sanctioning Marcum Asia CPAs, LLP, a New York-headquartered firm formerly known as Marcum Bernstein & Pinchuk LLP (“MarcumBP”).

Violations Found By the PCAOB

As described in further detail in the order, this matter involves MarcumBP’s violations of PCAOB rules and auditing standards in connection with its transfer of draft workpapers to China-based Shandong Haoxin Certified Public Accountants Co., Ltd. (“Haoxin”). The latter was the successor to MarcumBP as the auditor of Gridsum Holding Inc. (“Gridsum), a company headquartered in Beijing, China.

Gridsum engaged MarcumBP in June 2018 to audit Gridsum’s fiscal year 2015-2017 financial statements. Before MarcumBP completed those audits, Gridsum dismissed MarcumBP and retained Haoxin as its auditor.

Shortly before Gridsum dismissed MarcumBP, as part of an anticipated transition of the audits to Haoxin, MarcumBP transferred its draft workpapers to Haoxin. However, MarcumBP failed to reach an understanding with Haoxin as to the use of the draft workpapers, in violation of under AS 2610, Initial Audits—Communications Between Predecessor and Successor Auditors.

After receiving the draft workpapers, Haoxin improperly used them in its audits and issued an unqualified audit report on Gridsum’s 2015-2017 financial statements. This conduct was the subject of a November 2023 PCAOB enforcement settlement.

Sanctions Imposed by the PCAOB

The order:

• Censures Marcum Asia CPAs LLP;
• Imposes a civil money penalty in the amount of $100,000 on Marcum Asia CPAs LLP; and
• Requires Marcum Asia CPAs LLP to conduct training relating to communications between predecessor and successor auditors.

Learn More

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.