Another 91原创-headquartered public company auditing firm has recently been penalized by the United States regulator overseeing market regulations, bringing the total to 10 such companies since March 2021.
Additionally, another firm, headquartered in Toronto but with offices in B.C., has been penalized for work it conducted on a B.C.-registered firm.
Both rulings from the Public Company Accounting Oversight Board (PCAOB) are settlement offers wherein the firms do not admit nor deny the findings, “except as to the Board’s jurisdiction over [the] respondent and the subject matter of these proceedings.”
The board oversees companies that file with the U.S. Securities and Exchange Commission or otherwise sell securities in the U.S., in order to protect the interests of investors.
The rulings largely concern reporting failures.
“This latest round of orders shows that firms cannot neglect their responsibilities to keep audit committees informed and report required information to the PCAOB,” , director of the PCAOB’s division of enforcement and investigations.
“The PCAOB will bring disciplinary actions to reinforce the importance of these obligations, as set forth in our rules and standards.”
In the case of Crowe MacKay LLP, the board imposed a $30,000 fine, censured it and now requires the firm “to comply with its policies and procedures directed toward ensuring compliance with PCAOB rules and standards for communications with audit committees and the documentation of those communications.”
The concerns arose around auditing of B.C.-registered GreenPower Motor Company Inc. when the firm failed to document tax return preparation and consent services.
It also failed to document similar matters with a Victoria-based company, identified as “Issuer A,” that develops “novel therapeutic antibodies.”
The board specifically stated Crowe MacKay failed to document pre-approval from Issuer A’s audit committee for the audit services.
Crowe MacKay told the board it has since updated its policies.
In the second ruling, both dated Sep. 24, the board also fined Toronto-headquartered Grant Thornton LLP for auditing work it conducted on B.C.-incorporated Patagonia Gold Corp., a mineral exploration and production company headquartered in Bueno Aires, Argentina.
Much of the concerns relate to tax preparation services.
“During the audit and professional engagement period when Grant Thornton Canada was performing this audit, Grant Thornton Canada’s affiliate, Grant Thornton UK, performed tax return preparation services for a subsidiary of Patagonia,” the board stated.
“Grant Thornton Canada failed to document pre-approval from Patagonia’s audit committee for Grant Thornton UK to provide these tax return preparation services,” and “Grant Thornton Canada also failed to describe in writing to Patagonia’s audit committee the scope of the tax return preparation services, the fee structure for the engagement, and any oral agreement between Grant Thornton Canada and Patagonia relating to the tax services.”
Public company auditing rules in Canada are governed by the 91原创 Public Accountability Board and firms, and their accountants, are licensed by the Chartered Professional Accountants of British Columbia (CPABC), a self-regulatory body.
CPABC does not list the infractions of Crowe MacKay LLP on its website and largely anonymizes infraction findings under its published disciplinary summaries online.
In July, Glacier Media published a two-part series on enforcement policies of CPABC, with little public acknowledgement from CPABC or the provincial government, which oversees the CPABC via the Ministry of Advanced Education.
No other jurisdiction outside of the United States has come close to meeting that level of scrutiny and enforcement by the PCAOB for serious violations that it asserts — if left unchecked — would imperil the integrity of U.S. investment and capital markets.
, observing enforcement decisions published by the CPABC are typified by anonymity, scant disclosure and insignificant penalties.
