PCAOB Sanctions Three Auditors for Audit Failures

The Public Company Accounting Oversight Board (PCAOB) announced settled disciplinary orders against two former partners of Liggett & Webb, P.A. and an engagement quality reviewer for violations of auditing standards and rules. The violations occurred during audits of the 2019 and 2020 financial statements of Innovative Food Holdings, Inc. and Luvu Brands, Inc.

Jessica Etania, CPA and Arpita Joshi, CPA, who served as engagement partners, were sanctioned for failing to obtain sufficient audit evidence to support the audit opinions issued. They also failed to properly evaluate whether the companies' revenue was valued and presented fairly in the financial statements.

Robert Garick, CPA, an engagement quality reviewer, was sanctioned for failing to exercise due professional care and skepticism in his reviews, lacking an appropriate basis to approve issuance of the audit reports.

"Obtaining sufficient audit evidence and exercising due care and professional skepticism are fundamental to auditing. The PCAOB will take action to ensure there are consequences for putting investors at risk," said PCAOB Chair Erica Y. Williams.

The PCAOB censured all three auditors. Etania was fined $55,000 and Joshi $45,000. Both were barred from association with a registered accounting firm for two years, with a potential to reapply after that period. Garick received a $30,000 fine and a one-year practice limitation.

"This case highlights our commitment to pursue failures involving multiple audits," said Robert E. Rice, Director of the PCAOB's Division of Enforcement and Investigations.

The auditors consented to the sanctions without admitting or denying the findings.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.