backOn August 29, 2023, without admitting or denying the findings, Warren Averett, LLC (“Warren Averett”), consented to a disciplinary order and settlement with the PCAOB for alleged violations of the PCAOB independence rules and quality control standards.
According to the PCAOB, Warren Averett is a member of the BDO Alliance USA, which is an association of accounting firms that is wholly-owned by BDO USA, LLC (“BDO”). Warren Averett paid an annual license fee to BDO and, in return, marketed its connection to BDO and the BDO Alliance in brochures, its website, business cards, and other marketing publications.
BDO performed purchase price allocation valuation services for CytoDyn Inc. (“CytoDyn”) in fiscal year 2019 and derivative valuation service for CytoDyn in fiscal year 2020. Warren Averett then audited BDO’s valuation work as part of its audits of CytoDyn's financial statements. According to the PCAOB, Warren Averett had an interest in the quality of BDO’s valuation work since Warren Averett “marketed itself based on its association with the BDO Alliance” and had an interest in the reasonableness of BDO’s valuation services. Furthermore, the PCAOB alleged that Warren Averett failed to implement quality control policies and procedures relating to the “independence implications” of its BDO Alliance membership.
The settled order censures Warren Averett, imposes a $200,000 civil money penalty, and requires Warren Averett to undergo additional reviews and reporting regarding its quality controls for auditor independence.
The PCAOB press release is here, and the PCAOB settled order is here.