Accounting Regulator Bars Big 4 Auditor and Senior for Manipulating Audit File
The Public Company Accounting Oversight Board barred an engagement partner and a senior manager from associating with a registered public accounting firm for doctoring an audit file subject to PCAOB inspection. The PCAOB alleges that, upon learning that the PCAOB would conduct an audit examination, the respondents conspired to create a memo justifying a security valuation that would be the subject of the exam. PCAOB also alleges that the pair altered and created other documents and misled the examiners. The engagement partner was also fined $50,000. Both may re-apply after 3 years. The PCAOB said that it is the longest bar ever imposed on a Big 4 partner.
OUR TAKE: Regulatory examinations raise stress because they may uncover mistakes and control weaknesses. However, making a mistake is better than intentionally trying to conceal it.