The SEC and the PCAOB have been cracking down more on auditing firms in recent years, but the Marcum case goes further than most. "We are working closely with an independent consultant to ensure that we fully meet PCAOB audit standards, and we remain committed to maintaining the full confidence of our clients, regulators, and investors." "This process with the SEC and PCAOB identified critical areas for improvement in the firm's internal quality control and documentation processes," a Marcum spokesman said in an email. Marcum agreed to make changes in response to the charges. Depending on the audit standard at issue, violations were found in 25-50% of audits reviewed, with even more frequent, nearly wholesale violations found as to certain audit standards across Marcum's SPAC practice. In hundreds of SPAC audits, Marcum failed to comply with audit standards related to audit documentation, engagement quality reviews, risk assessments, audit committee communications, engagement partner supervision and review, and due professional care. The deficiencies spread across nearly all stages of the audit process and were exacerbated as Marcum took on more SPAC clients. The strain of this growth, however, exposed substantial, widespread and pre-existing deficiencies in the firm's underlying quality control policies, procedures and monitoring. "Today's order makes clear, the PCAOB will use every tool at our disposal, including requiring a firm to change its supervisory structure, in order to ensure compliance with PCAOB standards."Īccording to the SEC's order, over a three-year period, Marcum more than tripled its number of public company clients, the majority of which were SPACs, including auditing more than 400 SPAC initial public offerings in 20. "If firms put profits ahead of PCAOB standards that protect investors, there will be consequences," said PCAOB chair Erica Williams in a statement.
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