PCAOB Sanctions Six Firms for Violations Concerning Audit Committee Communications

On November 15, 2023, the PCAOB announced settled orders sanctioning six audit firms for allegedly violating PCAOB rules and standards related to audit committee communications. Specifically, the PCAOB alleged that the firms failed to make required communications to audit committees related to the planned participation of other firms and individuals in the audit, in violation of AS 1301.10, Communications with Audit Committees. The PCAOB further alleged that one firm (UHY LLP) failed to obtain audit committee pre-approval in connection with providing non-audit services to an issuer audit client, in violation of PCAOB Rule 3520, Auditor Independence, and PCAOB Rule 3524, Audit Committee Pre-Approval of Certain Tax Services. The Board identified these alleged violations through the same PCAOB sweep that led to similar sanctions of five other firms in July 2023.

The PCAOB censured all six firms and imposed civil monetary penalties as follows: a $35,000 penalty to Cherry Bekaert LLP, a $50,000 penalty to Deloitte Audit (Luxembourg), $40,000 penalties to KPMG (Argentina) and KPMG Auditores Independentes Ltda., and $45,000 penalties to RH CPA and UHY LLP. Each firm also agreed to undertake measures to establish, improve, or comply with revised policies and procedures regarding compliance with PCAOB rules and standards concerning these violations.

The PCAOB’s press release is available here. The settled orders are available here: Cherry Bekaert LLP, Deloitte Audit (Luxembourg), KPMG (Argentina), KPMG Auditores Independentes Ltda., RH CPA, UHY LLP.