CPE ARTICLE
Understanding and Avoiding Auditing-related Enforcement Actions By Abdullah al-Moshaigeh, Ph.D., Denise Dickins, Ph.D., CPA, CIA, and Julia L. Higgs, Ph.D., CPA CURRICULUM: Accounting and Auditing LEVEL: Basic DESIGNED FOR: Auditors and CPAs in public practice OBJECTIVES: To describe the interrelationship between the enforcement processes of the Public Company Accounting Oversight Board (PCAOB), the American Institute of CPAs (AICPA) and state boards of accountancy (BOAs), and help CPAs better understand and avoid auditing-related enforcement actions KEY TOPICS: PCAOB, AICPA and BOA enforcement issues, present data of recent actions, the interrelationship of auditing-related enforcement actions and adhering to the professional standards PREREQUISITES: None ADVANCED PREPARATION: None
32 Texas Society of CPAs
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n the United States, CPAs who perform audits are obligated to follow many rules and regulations, including those of the Public Company Accounting Oversight Board (PCAOB), the American Institute of CPAs (AICPA) and state boards of accountancy (BOAs). To help CPAs better understand and avoid auditing-related enforcement actions, in this article we describe the interrelationship between the enforcement processes of these organizations and present data of recent enforcement actions.
PCAOB Enforcement PCAOB has authority to investigate and discipline registered public accounting firms and persons associated with those firms for noncompliance with its rules, other laws and rules, and professional standards governing the audits of issuers and broker-dealers. Investigations can be initiated based on the results of its annual or triennial inspections of registered CPA firms, confidential tips or its interactions with CPAs of registered firms. PCAOB’s Division of Enforcement and Investigations conducts enforcement activities. Cases unrelated to issuer audits, such as insider trading by a CPA, are handled by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ). This article does not address these types of matters. As depicted in Figure 1, from the date PCAOB issued its first enforcement report on May 24, 2005, through December 31, 2018, 183 U.S. CPAs were sanctioned.
