PCAOB sanctions Marcum Asia

Courtesy of PCAOB

The Public Company Accounting Oversight Board has sanctioned Marcum Asia CPAs LLP over violations related to its communications with a successor auditor.

According to the settled disciplinary order, the firm violated board rules and auditing standards in transferring its workpapers for a Beijing-based company to a Chinese auditor.

In 2018, New York-based Marcum Asia, which was known as Marcum Bernstein & Pinchuk, or MarcumBP, at the time, was hired by Gridsum Holding Inc. to audit its 2015-2017 financial statements.

Before Marcum Asian could complete those audits, however, it was dismissed in favor of China-based Shandong Haoxin CPAs Co. Ltd.

As a result Marcum Asia transferred its draft workpapers to Haoxin, but failed to reach an understanding with them about the use of the workpapers, as required by AS 2610, "Initial Audits – Communications Between Predecessor and Successor Auditors."

Haoxin then used the workpapers improperly in its audits of Gridsum, and issued an unqualified audit report on the 2015-2017 financials. That was the subject of a separate settlement in November 2023, which included at $940,000 fine against Haoxin.

The sanctions for Marcum Asia include formal censure, a civil money penalty of $100,000, and a requirement that the firm conduct training on communications between predecessor and successor auditors.