backOn April 22, 2025, the PCAOB announced a settled disciplinary order against Adeptus Partners LLC (the “Firm”) and one of its partners, Howard S. Krant (“Krant”), for violating PCAOB rules and quality control standards in connection with three audits—the 2020 and 2021 year-end audits for one issuer client, and the 2020 year-end audit for a separate issuer client. Krant was the engagement partner for the audits.
Without admitting or denying the Board’s findings, the Firm and Krant consented to the order which (1) censured them, (2) suspended Krant for one year from being an associated person of a registered public accounting firm and imposed a $50,000 civil money penalty, (3) imposed a $75,000 civil money penalty on the Firm, and (4) required the Firm (i) to retain an independent consultant to review and make recommendations regarding the firm’s quality control policies and procedures and (ii) to certify that the firm complied with the undertakings within 270 days.
The Board imposed sanctions against Krant based on multiple findings. With respect to the two 2020 year-end audits, the PCAOB found that the engagement partner failed to adequately supervise the engagement teams because the engagement partner did not review any work papers for the audits and signed the audit reports based solely on discussions with the engagement teams and engagement quality review partner. In connection with the 2021 year-end audit, the PCAOB found that Krant failed to properly review the engagement team’s work on deferred revenue to ensure sufficient appropriate audit evidence was obtained. According to the PCAOB, Krant failed to plan and perform appropriate audit procedures to obtain sufficient appropriate audit evidence regarding the deferred revenue balance, failed to evaluate whether the balance was appropriately recorded as deferred revenue, and failed to resolve inconsistent audit evidence.
The Board imposed sanctions against the Firm, in connection with the three audits, on the basis that the Firm violated PCAOB quality control standards because the Firm’s system of quality control failed to provide the Firm with reasonable assurance that the work performed by Firm personnel met the requirements of AS 1215, Audit Documentation. Specifically, the PCAOB found that (1) significant changes were made to work papers after they had been signed-off on as reviewed, (2) Krant’s signature was added to work papers without his knowledge, (3) the final sets of audit documentation included blank, unsigned, and undated work papers, and (4) audit procedures related to journal entry testing for two audits were inadequately documented.
The PCAOB release is available here, and the settled order is available here.