Reuben E. Price & Co. Public Accountancy Corp., a small firm based in San Francisco, has been censured by the Public Company Accounting Oversight Board for failing to take action after one of the firm's clients issued an annual report that appeared to be, but was not, audited.

No fines were imposed on the firm, which has one partner, Reuben E. Price, and eight other professional staff members. The firm neither admitted nor denied the PCAOB's findings about its work for Universal Communication Systems Inc, a company that markets solar energy systems.

According to the PCAOB, Universal filed its 2003 annual report with a document it claimed was an audit report issued by Price. Price had provided Universal with a draft audit report, but had not completed the actual audit, according to the board. Although he complained to Universal's management and a member of its board of directors, the board said that the firm should have resigned from the engagement and told the company that issuing the unapproved report would have a material effect on Universal's financial statements.

Instead, it wasn't until nearly four months later, in April 2004, when Price received notice that the PCAOB would be conducting an inspection, that the firm sent a formal letter to Universal, saying that the audits of the company's financial statements had not been completed.

Universal chief executive Michael Zwebner said that it is no longer using Reuben E. Price & Co., and disclosed in a May 2004 filing with the Securities and Exchange Commission that it would not be relying on the previously issued annual report.

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