backOn November 14, 2023, the PCAOB announced a settled order sanctioning PricewaterhouseCoopers Auditing Company SA (“PwC Greece”) and an engagement partner for alleged audit failures in connection with the firm’s 2016 audit of Aegean Marine Petroleum Network Inc.
The PCAOB alleged that PwC Greece and the engagement partner failed to respond with due processional care and appropriate professional skepticism to inconsistent audit evidence concerning unusual transactions with four of Aegean’s customers that collectively accounted for 13% of Aegean’s reported revenue and 38% of its gross profit. For example, the PCAOB alleged that the firm encountered substantial difficulties obtaining street addresses for the four customers to use in the firm’s accounts receivable confirmations, and that when a PwC network firm visited three addresses that were ultimately provided, it found that one address did not exist and two were residential apartment buildings with no businesses located there. The PCAOB alleged that the engagement team failed to respond appropriately to this contradictory audit evidence and failed to document the attempted site visits in the workpapers.
The PCAOB further alleged that despite delaying the firm’s audit report due to a lack of sufficient appropriate audit evidence and advising Aegean that it would need to collect the year-end receivable balances for the four customers in order to avoid an audit adjustment, the engagement partner ultimately authorized the firm’s unqualified audit opinion based on telephone inquiries and an Aegean-provided extract of an electronic bank account record, without taking steps to ensure the reliability of such evidence or to resolve additional contradictory evidence presented by the extract itself.
PwC Greece and the engagement partner agreed to settle the matter without admitting or denying the PCAOB’s allegations. PwC Greece’s settled order censures the firm, imposes a $3 million civil monetary penalty, and requires the firm to complete remedial undertakings. The engagement partner’s settled order censures the partner, imposes an $80,000 civil monetary penalty, and bars the partner from associating with a PCAOB-registered accounting firm (with the right to reapply after two years).
The PCAOB’s press release is available here, PwC Greece’s settled order is available here, and the engagement partner’s settled order is available here.