The Public Company Accounting Oversight Board (PCAOB) announced penalties against five firms for violations regarding communications with audit committees as part of its latest enforcement sweep.
Penalties against the firms ranged from $30,000-$50,000. Each firm consented to remedial measures in addition to being censured, the PCAOB announced in a press release Friday.
The details: Three of the firms were fined for failing to obtain audit committee pre-approval in connection with providing audit and/or nonaudit services to issuer audit clients, according to the PCAOB. BPM received the largest penalty of the bunch at $50,000, while Plante & Moran and S. R. Snodgrass were fined $40,000 and $35,000, respectively.
At BPM, audit services performed for special purpose acquisition company GigCapital2 coincided with tax compliance services provided to the company. BPM failed to obtain pre-approval from GigCapital2’s audit committee to provide the tax compliance services, according to the PCAOB’s order.
BPM did not respond to a request for comment.
The two other firms sanctioned, Mancera and MSPC, failed to make and/or document communications with audit committees regarding the planned participation of other firms and auditors in the audit, the PCAOB said. They were fined $40,000 and $30,000, respectively.
“Firms must be vigilant in preserving their independence, and part of that means making sure that services performed for issuer audit clients are pre-approved by their audit committees,” said PCAOB Chair Erica Williams in the agency’s release. “At the same time, required disclosures are critical to ensure audit committees have the information they need to effectively oversee the auditor’s work.”
Compliance considerations: The PCAOB highlighted the success of its sweeps, which allow the agency to investigate potential violations from multiple firms at the same time. The agency in the past year has also led sweeps regarding unregistered auditor use and alleged audit exam cheating.
As part of their remediation, BPM, Plante & Moran, and MSPC agreed to revise their policies and procedures for communicating with audit committees. S.R. Snodgrass received credit for already revising its procedures.
Mancera, an EY affiliate based in Mexico, implemented updated audit planning and results guidance for communications and trained its personnel on the changes, the PCAOB said.