An audit partner at accounting firm Spielman Koenigsberg & Parker (SKP) agreed to pay a record $150,000 fine handed down by the Public Company Accounting Oversight Board (PCAOB) for misleading its investigators over the course of multiple inspections.
The alleged actions of Jonathan Taylor also earned SKP a fine of $150,000 and led to the PCAOB revoking the firm’s registration for at least five years. SKP was further censured for failing to establish and implement adequate quality control policies and procedures, according to the regulator.
Taylor agreed to be censured and permanently barred from association with a registered public accounting firm as part of his settlement. His financial penalty total is the highest the regulator has assessed against an individual.
“The board will take action to protect investors from bad actors and impose consequences on those who put the integrity of our capital markets at risk,” said PCAOB Chair Erica Williams in a press release.
The details: Taylor is one of seven partners working at SKP, a New York-based accounting firm founded in 1955 and registered with the PCAOB since 2006. Taylor has worked as a partner at SKP since 1999, according to his company bio, and is in charge of technical and quality review.
For the fiscal years ended 2015-20, SKP’s only issuer clients were a pair of contribution plans covering certain salaried and hourly employees of clothing company PVH Corp. Taylor served as engagement partner for SKP’s audits of the plans’ financial statements.
In the lead up to a 2021 PCAOB inspection, Taylor “added or modified approximately 80 audit work papers before providing the improperly altered documentation to PCAOB inspectors,” according to the regulator. His alleged misconduct was the result of a monthslong coordinated effort with other professionals at SKP to alter and backdate audit work papers, the PCAOB stated in its order.
When inspectors questioned modification dates on the work papers, Taylor misled them, according to the regulator. The PCAOB then launched an investigation into his conduct, and Taylor provided false information regarding “whether engagement quality reviews (EQRs) were performed, when and what kinds of alterations were made to work papers, and whether SKP had certain documents in its possession,” the order stated. The PCAOB also found Taylor had lied to inspectors regarding whether EQRs had been performed during a separate inspection in 2018.
From 2018-21, SKP’s system of quality control “failed to prevent or detect efforts by Taylor and other SKP personnel to improperly alter” work papers provided to inspectors, the PCAOB said in the firm’s order. Because he was responsible for audit quality at the firm, Taylor “directly and substantially contributed to SKP’s failure to maintain an adequate quality control system with respect to issuer audits,” the regulator stated.
SKP was also faulted for failing to obtain EQRs of its audits of the PVH plans, timely file several Form APs with the PCAOB, and filing materially inaccurate Form 2s with the regulator.
SKP must establish policies and procedures to ensure compliance with regulatory requirements applicable to audits and reviews of issuers, ensure training of personnel at least annually on such requirements, and provide evidence of its compliance in these areas before reapplying for registration in five years.
SKP did not return a request for comment.
The PCAOB last month permanently revoked the registration of Canadian accounting firm Hay & Watson for improperly altering audit documents provided to the board’s inspectors.
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