backOn November 30, 2023, the PCAOB announced settled orders sanctioning two audit firms—PricewaterhouseCoopers Zhong Tian, LLP PwC Shanghai”) and PricewaterhouseCoopers (“PwC Hong Kong”)—for allegedly violating PCAOB rules and quality control standards related to integrity and personnel management.
In separate settled orders, the PCAOB alleged that the quality control policies and procedures at both firms failed to appropriately administer and oversee internal training tests related to U.S. auditing curriculum, including tests designed to help its audit professionals satisfy requirements for maintaining professional certifications. At each firm, professionals used unauthorized software applications to obtain access to correct answers, improperly fast-forwarded through the trainings, and/or falsely recorded that they had completed the trainings. With respect to both firms, the Board alleged a failure to detect and prevent this conduct, e.g., monitoring procedures were only designed to track items like the completion of trainings and a failure to communicate specific warnings against the use of inappropriate means to complete tests.
The PCAOB censured both firms and imposed civil monetary penalties as follows: a $4 million penalty to PwC Hong Kong and a $3 million penalty to PwC Shanghai. In addition, the PCAOB required the firms to review and improve their quality control policies and procedures and implement sanctions it planned to impose on its personnel in connection with the alleged improper behavior.
The PCAOB’s press release is available here. The settled orders are available here: PwC Hong Kong, PwC Shanghai. PCAOB Chair Erica Y. Williams’ and SEC Chair Gary Gensler’s statements in support are available here: Williams, Gensler.