Audit Conduct

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PCAOB censures audit firm for violating independence and audit requirements

On April 9, 2019, the Public Company Accounting Oversight Board (PCAOB) censured the firm Raich Ende Malter & Co., LLP, (the firm), imposing a $15K civil money penalty on the firm, and requiring the firm to undertake remedial measures for violating independence and audit requirements with respect to an issuer audit client.

Specifically, the PCAOB found that the issuer's audit partner served in the lead or the concurring partner role for more than five (5) consecutive years, which is prohibited under the rules. (The firm did not quality for the "small firm exemption" included in the rules.) The PCAOB also found that the firm failed to observe the two-year "cooling-off" period required under Auditing Standard 1220 to perform an engagement quality review of the issuer's audit. The firm also violated the PCAOB's quality control standards by not having sufficient quality controls in place to provide reasonable assurance that the firm's personnel comply with applicable professional standards and that monitoring mechanisms were effective.