PCAOB Sanctions MaloneBailey for Pervasive Quality Control Violations

The Public Company Accounting Oversight Board (PCAOB) announced a settled disciplinary order against audit firm MaloneBailey, LLP for violations of PCAOB rules and quality control standards.

From 2018 through 2021, PCAOB inspections repeatedly identified significant deficiencies in MaloneBailey's audit work, raising concerns about the firm's ability to perform high-quality audits. Despite being made aware of these deficiencies, the firm failed to implement effective changes to improve its system of quality control over this multi-year period.

"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 PCAOB Chair Erica Y. Williams.

As part of the settlement, MaloneBailey agreed to be censured and to pay a $400,000 civil money penalty. The firm must also engage an independent consultant to review and make recommendations on its quality control policies and procedures. Additionally, MaloneBailey must conduct training on proper audit procedures for all audit staff.

"Today's order should serve as a stark reminder that firms must have effective systems of quality control," said Robert E. Rice, Director of the PCAOB's Division of Enforcement and Investigations. "If they do not, we will hold them accountable for those failures, particularly when the failures have been repeatedly identified during inspections of the firm."

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