The Public Company Accounting Oversight Board announced $590,000 in fines on Top 100 Firm Haynie & Co. and some of its partners as part of a settled disciplinary order, and also sanctioned Jack Shama and his eponymous CPA firm.
In the case of Salt Lake City-based Haynie, in addition to the fines, the board is also requiring the firm to engage an independent consultant and is imposing practice limitations and bars on some of the partners.
The order revolves around two Haynie audits: one of the 2019 financial statements of George Risk Industries, and one of the 2019 statements of Investview Inc. The PCAOB found that Haynie violated its rules and standards on both, as well as its quality control standards.
Specifically, it found that current partners Tyson Holman and Steven Avis, who were the engagement partners on George Risk and Investview, respectively, failed to exercise due professional care and skepticism, didn't obtain enough appropriate audit evidence to support their opinions, and didn't evaluate whether the statements were presented in conformity with the applicable reporting frameworks.
The board also found that former partners Richard Fleischman and Anna Hrabova, the engagement quality review partners on Investview and George Risk, respectively, didn't have an appropriate basis for concurring in the issuance of the firm's audit reports, because they hadn't exercised due professional care and skepticism.
The firm itself violated PCAOB quality control standards because it didn't effectively implement procedures to make sure its audit personnel's work met the necessary standards and requirements, and didn't have the necessary procedures to make sure its QC processes were working.
"The multitude of audit deficiencies in this case demonstrates that, where a firm's quality control system is lacking, audit quality suffers," said Robert Rice, director of the PCAOB's Division of Enforcement and Investigations, in a statement.
All four partners and ex-partners, and the firm, were censured. In addition:
- Holman and Avis were hit with $65,000 penalties and two-year bars from associating with a registered firm;
- Hrabova and Fleischman were hit with $30,000 penalties and one-year practice limitations; and
- The firm faces at $400,000 penalty.
"The PCAOB means business when it comes to enforcing our standards to meet our mission of protecting investors," said PCAOB Chair Erica Williams in a statement. "Where audit deficiencies reflect a deeper failure of a firm's quality control system, the PCAOB will take action to impose accountability at both the firm level and the engagement team level."
Under Williams, the board has
A permanent ban
Separately, the board issued a settled disciplinary order against sole proprietor Jack Shama, revoking his New York-based firm's registration and permanently barring him from working for a registered firm.
The PCAOB sanctioned Shama for "numerous and repeated violations" of its rules and standards across nine audits, in which he and his firm "performed limited or no audit procedures on many significant accounts and transactions." The firm also failed to have an engagement quality review performed for any of the audits, and did not have the necessary QC systems in place.
"The pervasive violations of PCAOB standards that occurred in the nine audits at issue are unacceptable and warrant the permanent registration revocation and permanent bar the board has imposed," said the PCAOB's Rice, in a statement.
Shama and his firm consented to the order without admitting or denying the findings.
