PCAOB Sanctions Engagement Partner and EQR Partner for Audit and Quality Control Violations

On February 6, 2024, the PCAOB announced a settled disciplinary order sanctioning two partners (Marcelo de los Santos Anaya and Martín Rodríguez Martínez) of the Mexican accounting firm Marcelo de los Santos y Cía, S.C. (the “Firm”) for their roles in two consolidated audits in 2018 and 2019. 

De los Santos served as the engagement partner for both audits and the PCAOB found he “failed to exercise due professional care and failed to obtain sufficient appropriate evidence to support the Firm’s opinion on [the] financial statements and [management’s] opinion on the effectiveness of [the company’s] ICFR.”  Specifically, among other violations, he referenced International Standards on Auditing in his procedures instead of PCAOB auditing standards, and with respect to ICFR, he failed to conduct fundamental audit procedures, including testing controls over numerous significant accounts and evaluating the severity of identified control deficiencies.

Rodríguez served as the EQR partner for both audits and gave concurring approval of issuance for both. The PCAOB found he failed to identify or properly address the many significant deficiencies in the engagement team’s testing including: (1) failure to properly evaluate the engagement team’s assessment of significant risks and fraud risks; (2) failure to evaluate the severity of identified ICFR deficiencies; (3) failure to identify deficiencies in the engagement team’s independence evaluation; and (4) failure to identify numerous required communications to the audit committee.

Without admitting or denying the findings, the two auditors consented to the PCAOB order against them.  De los Santos agreed to a $125,000 penalty and five-year bar from being associated with a registered public accounting firm.  Rodríguez agreed to a $40,000 penalty and two-year bar. 

A copy of the announcement and link to the order can be found here.