News & Insights

Auditor Liability Bulletin

March 22, 2024

PCAOB Sanctions Audit Firm and Its Sole Partner for PCAOB Rules and Standards Violations

On March 19, 2024, without admitting or denying findings, the Israel-based auditing firm, Halperin Ilanit CPA, and the firm’s owner, Ilanit Halperin, settled with the PCAOB for alleged violations of PCAOB rules and standards as well as violating quality control standards.

According to the PCAOB, the respondents failed to obtain sufficient appropriate audit evidence in testing the valuation of an intangible asset and the valuation of a provision for legal claims in connection with two separate issuer audits.  In addition, respondents failed to evaluate whether certain matters constituted critical audit matters; failed to make certain required audit committee communications; failed to timely assemble a complete and final set of audit documentation; and failed to properly document changes made to audit documentation after the document completion date.  The PCAOB also asserted that the firm failed to obtain engagement quality reviews for the audits and failed to timely file PCAOB Form 2s and Form APs.  Finally, the PCAOB alleged that the firm’s quality control mechanisms did not provide reasonable assurance that the work performed would meet PCAOB standards and that Halperin knowingly or recklessly and directly and substantially contributed to the firm’s violations of PCAOB rules and engagement quality review and quality control standards.

The firm’s owner and the firm agreed to pay $200,000 in civil monetary penalties, jointly and severally. The PCAOB also revoked the firm’s registration, with the right to reapply after 3 years, subject to evidence of remedial actions to improve its quality control system. The firm’s owner was also barred from being an associate person of a registered public accounting firm, with the right to petition the Board to terminate that bar after 3 years and after completing 40 additional hours of continuing professional education.

The PCAOB press release is available here, and the settled order is located here.