PCAOB Sanctions 3 Firms for Failing to Comply with Reporting Requirements

The Public Company Accounting Oversight Board (PCAOB) announced today that it is sanctioning three accounting firms - KKM CPA Associates PLLC, BDO Chartered Accountants & Advisors, and De Visser Gray LLP - for violating rules and regulations by failing to comply with PCAOB reporting requirements.

In the case of KKM, the PCAOB censured the firm and imposed a $25,000 civil money penalty. KKM violated PCAOB Rule 2200 by filing an annual report (Form 2) that inaccurately stated the firm had not issued any audit reports for issuers during the reporting period, when in fact it had audited Mystic Holdings, Inc.

Despite multiple attempts by the PCAOB to resolve the issue, KKM failed to file an amended Form 2 correcting the inaccuracy until after being notified by the PCAOB's Division of Enforcement and Investigations.

The disciplinary order requires KKM to establish policies and procedures to ensure reportable audit client information is properly identified and reported to the PCAOB. It also mandates annual training on PCAOB reporting requirements.

The PCAOB censured BDO Chartered Accountants & Advisors and imposed a $20,000 penalty for violating PCAOB Rule 2203 by failing to timely report the initiation and conclusion of a disciplinary proceeding against the firm by the UAE's auditor oversight authority.

For De Visser Gray LLP, the PCAOB censured the firm, imposed a $60,000 civil penalty, and required remedial measures including:

• Establishing quality control policies and procedures to ensure compliance with auditing standards
• Providing training on topics like critical audit matters and independence
• Certifying compliance with these remedial measures

The PCAOB found De Visser Gray's quality control system failed to provide reasonable assurance that personnel would comply with requirements related to critical audit matters, audit committee communications, reporting on Form APs, and auditor independence.

The disciplinary actions aim to enforce full public disclosure by accounting firms about the audits they perform and any disciplinary proceedings against them, as required by PCAOB rules and regulations intended to protect investors.

"When registered firms fail to comply with reporting requirements, it deprives investors of important information about those firms," said PCAOB Chair Erica Y. Williams in the announcement.

By levying these sanctions, the PCAOB is seeking to uphold standards for transparency and complete reporting by audit firms of matters that are critical for public companies and the markets.

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