News & Insights

Auditor Liability Bulletin

March 29, 2024

PCAOB Sanctions Australian Firm for Violations Related to Form 3 Reporting Requirements

On March 28, 2024, the Australian member firm of the PwC global network, PricewaterhouseCoopers (“PwC Australia”), settled with the PCAOB for violations of PCAOB rules and quality control standards.

According to the PCAOB, the firm’s quality control policies and procedures failed to provide it with reasonable assurance that it would comply with certain PCAOB reporting requirements. Although PwC Australia’s leadership was directly involved in and had oversight over the firm’s handling of a matter that required reporting to the PCAOB, the information was not shared with the personnel responsible for compliance with PCAOB reporting requirements. Specifically, the Australian Tax Practitioners Board (“TPB”) had initiated and concluded proceedings against PwC Australia in 2022, in connection with concerns that the firm failed to properly manage conflicts of interest and impermissibly shared confidential information. Pursuant to PCAOB Rule 2203, Special Reports, registered public accounting firms must provide information about the initiation and conclusion of disciplinary proceedings against the firm by filing a Form 3 within thirty days of the occurrence of those events. According to the PCAOB, PwC Australia failed to timely disclose the TPB proceedings. Furthermore, the firm’s quality control monitoring processes failed to prevent and identify the firm’s noncompliance with its Form 3 reporting requirements. In particular, information about the TPB’s investigation was not shared with the individuals responsible for Form 3 compliance, and the firm’s monitoring procedures failed to compensate for that failure.  

The PCAOB imposed a $600,000 civil money penalty and censured the firm, noting that it took into account the firm’s extraordinary cooperation in the matter. The order, entered on a neither admit nor deny basis, also requires the firm to undertake and certify completed improvements to its policies and procedures, including monitoring procedures, related to compliance with its Form 3 reporting requirements.

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