Audit firm MaloneBailey agreed to pay a $400,000 fine to settle allegations levied by the Public Company Accounting Oversight Board (PCAOB) over “pervasive” quality control violations.

The firm agreed to be censured, engage an independent consultant, and conduct certain training for all audit staff, the PCAOB announced in a press release Tuesday.

“Effective quality control systems are critical to high-quality audits, and the PCAOB will not tolerate failures to maintain those systems and properly protect investors,” said Erica Williams, PCAOB chair, in the release.

The details: Between 2018 and 2021, the firm was notified following three inspections by agency staff to concerns over engagement performance but “failed to make effective changes to improve its system of quality control,” the PCAOB alleged.

The firm conducted an internal inspection for the fiscal year ended June 19, 2019, which “identified a large number of engagement-specific deficiencies,” the PCAOB said in its order.

Despite the discovery, the firm “failed to take sufficient or timely corrective action to improve compliance with … quality control policies and procedures,” the PCAOB alleged.

Compliance considerations: Within 120 days, the firm must hire an independent consultant to review and recommend ways to improve quality control policies and procedures, the PCAOB noted.

MaloneBailey did not respond to a request for comment. The firm agreed to settle without admitting or denying the PCAOB’s findings.

Jeff Dale is Managing Editor, Editorial Projects and Analytics, at Compliance Week. He previously served as Compliance Week's Digital Editor and has worked as a copy editor at the Boston Herald and city editor at The Hour Publishing Co. in Norwalk, Conn.View full Profile

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