backOn June 21, 2023, without admitting or denying the findings, Marcum LLP (“Marcum”) consented to a disciplinary order and settlement with the PCAOB and SEC for alleged violations of PCAOB rules and quality control standards.
The PCAOB’s settled order alleges that Marcum failed to establish sufficient policies and procedures to provide reasonable assurance that its personnel complied with professional standards and regulatory requirements. In particular, the PCAOB alleges that Marcum accepted hundreds of new SPAC issuer clients without properly considering whether it could complete the new engagements and perform sufficient quality reviews and audits. According to the PCAOB, Marcum violated Quality Control Standard 20 (among other applicable regulations and standards) for failure to timely implement sufficient quality control policies and procedures to manage these new SPAC audit engagements.
The SEC’s settled order made similar findings regarding Marcum’s management of SPAC engagements and opined that this matter “involves systemic quality control failures and violations of audit standards by Marcum from at least 2020.” The SEC alleges deficiencies in Marcum’s audit documentation, engagement quality reviews, documentation of warrant accounting procedures, communications with audit committees, risk assessments, technical consultations, and engagement partner supervision and review.
The PCAOB’s settled order censures Marcum, imposes a $3 million civil money penalty, and requires Marcum to engage an independent consultant to review Marcum’s quality control procedures. Marcum must implement any recommendations from the independent consultant. The settled order further requires changes to Marcum’s supervisory structure, including requiring the firm to create a new “Chief Quality Officer,” create a committee to oversee the firm’s audit practice, and implement additional staff training. The SEC’s settled order adopts the same penalties as the PCAOB settled order and imposes an additional $10 million civil money penalty.
The PCAOB press release is here and the PCAOB settled order is here. The SEC press release is here and the SEC Order is here.