On September 12, 2023, without admitting or denying the findings, K.R. Margetson Ltd. and its sole partner settled with the PCAOB and consented to a disciplinary order for alleged violations of PCAOB quality control standards and other audit standards.

According to the PCAOB, K.R. Margetson failed to perform adequate procedures and obtain sufficient audit evidence in determining the valuation of an acquired license agreement by its client, Nevada-based Madison Technologies, Inc. (“Madison”). According to the settled order, the PCAOB identified deficiencies in K.R. Margetson’s performance of issuer audits and in its system of quality control, including quality control defects related to K.R. Margetson’s testing of complex transactions, in four inspections performed from 2010 to 2019. The PCAOB alleges that in the 2020 audit of Madison Technologies, K.R. Margetson failed to perform adequate procedures to determine whether Madison’s acquisition of a license was properly valued or to obtain sufficient evidence to support the conclusion that Madison’s valuation was reasonable.

The PCAOB imposed a $30,000 civil money penalty, revoked K.R. Margetson’s registration with the option to reapply after one year, and required the firm to undertake certain remedial measures to improve its system of quality control before applying for re-registration. The order also bars the firm’s sole partner from being an associated person of a registered public accounting firm, with the option to file for PCAOB consent to associate after one year.

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