Audit regulators have delivered an enforcement action to a former partner and current partner at Grant Thornton over an audit dating back to 2013.
The Public Company Accounting Oversight Board censured and imposed suspensions on Richard Huff, the engagement partner over the blown audit of a real investment investment trust, and Wayne Kaplan, the engagement quality reviewer. The PCAOB says Huff was already under a partner performance plan at Grant Thornton when an internal review revealed numerous audit lapses in the REIT’s 2012 year-end audit, before field work had begun for the 2013 audit.
“This matter is related to an audit from 2013,” said Grant Thornton in a statement. “We are pleased to have it resolved. We appreciate the work done by the PCAOB, and are committed to delivering the highest standards of quality.”
According to the enforcement orders, Huff knew the REIT had numerous impaired loans that were material to the financial statements for which the entity recorded no reserves, yet he failed in numerous respects to assure the audit opinion was supported by appropriate audit evidence. The PCAOB says Huff relied too easily on the engagement team without considering their relative skills or supervision, even failing to consider or address an acknowledged fraud risk associated with the entity’s allowance for loan losses.
Kaplan served as the engagement quality reviewer over the 2012 and 2013 audits of the same REIT, the PCAOB says. At that time, he was the office managing partner at Grant Thornton’s Philadelphia office. The PCAOB says Kaplan failed to comply with auditing standards governing the engagement quality review in the 2013 review. According to the PCAOB, he “failed to exercise due professional care, including appropriate professional skepticism.”
The PCAOB issued a one-year suspension against Huff, which means he may not be “an associated person of a registered public accounting firm” during that time. He retired from Grant Thornton in 2016, indicating in his online professional profile he is now a principal at accounting firm CliftonLarsonAllen.
For Kaplan, the PCAOB imposed a two-year bar on serving as an engagement quality reviewer. He remains with Grant Thornton as a partner-in-charge in industries and markets at the firm’s Philadelphia office. Both individuals are required to complete additional professional education.