News & Insights

Auditor Liability Bulletin

March 8, 2024

PCAOB Sanctions Audit Firm for Violations of PCAOB Rules and Auditing Standards

On March 5, 2024, the PCAOB announced a settled disciplinary order sanctioning Gries & Associates, LLC (the “Firm”) and its sole partner Blaze Gries (“Gries”) for violations of PCAOB rules and auditing standards.

According to the PCAOB, during an audit of Tingo, Inc.’s 2021 financial statements, the Firm and Gries failed to perform any audit procedures to determine the appropriate basis of accounting for the 2021 reverse merger between Tingo Mobile, PLC and IWEB, Inc., pursuant to which IWEB changed its name to Tingo, Inc.  The PCAOB alleged that, although the Firm and Gries were aware of multiple “red flags” that the transaction was a reverse acquisition rather than an acquisition, the Firm and Gries assumed that acquisition accounting, rather than reverse acquisition accounting, applied.  Four months after the Firm’s audit report, Tingo, Inc. restated its 2021 financial statements to remove roughly $3.6 billion of goodwill, reflecting a 56% reduction in the company’s assets.  In addition, the PCAOB also alleged that the Firm and Gries failed to obtain sufficient appropriate audit evidence to support Tingo, Inc.’s accounting for its stock compensation issuance in 2021.  Finally, the PCAOB alleged that the Firm violated PCAOB Rule 3211, Auditor Reporting of Certain Audit Participants, for failing to timely file Form APs for ten audit reports associated with eight issuer audit clients. 

Without admitting or denying the findings, the Firm and Gries consented to the PCAOB order imposing a $65,000 civil money penalty and revoking the Firm’s PCAOB registration for one year.  In addition, the PCAOB order bars Gries from associating with a registered public accounting firm with a right to apply for reinstatement after one year and the completion of 24 hours of continuing professional education and training.

The PCAOB settled order is available here.