• Register
Return to: Home > News > PCAOB announces $1m settlement with Indonesian EY member

PCAOB announces $1m settlement with Indonesian EY member

The Public Company Accounting Oversight Board (PCAOB) has announced that it has censured and imposed a $1m civil penalty on KAP Purwantono, Suherman & Surja an Indonesian member of EY global network.

The settlement was regarding audit failure, non-cooperation, and violations of Quality Control Standards. Two audit partners were sanctioned following the investigation over their roles in the failure, including a former practice director for EY’s Asia Pacific region, James Randall Leali, and a former engagement partner, Roy Iman Wirahardja.

The case involved the 2011 audit of an Indonesian telecommunications company. An EY partner, in the US, informed the engagement partner of the failures while performing a review required by PCAOB standards. Despite the review partners concerns, the practice director authorised the engagement partner to release the audit report.

The company failed to provide sufficient evidence to support the accounting for more than 4,000 leases for spaces on cellular towers. EY Indonesia then released its audit opinion without obtaining completed analysis.

Wirahardja was censured and fined $20,000, with a five year ban from any association with a PCAOB registered firm. Leali was also censured and fined $10,000, with a one year restriction. Neither admitted or denied the allegations.

PCAOB chairman, James R. Doty said: “Reliable audits are critical to providing investors a basis for confidence to participate in U.S. public capital markets. PCAOB standards and oversight are key protections for investors in U.S. securities.”

Dozens of new audit work papers were created improperly by members of the EY Indonesia engagement team shortly before the 2012 PCAOB audit inspection. EY Indonesia and the engagement partner did not cooperate with the Board's inspection and investigation.

"In their haste to issue audit reports for their client, the firm and two partners shirked their fundamental duty to obtain sufficient audit evidence," said Claudius B. Modesti, director of the PCAOB Division of Enforcement and Investigations.

Top Content

    Q&A: Code on managing risk in UK financial services revamp

    Following the UK Chartered Institute of Internal Auditors (CIIA UK) release of its updated code on managing risk in UK financial services, CIIA UK policy and external relations director Alisdair McIntosh discusses the changes to the code and how it aims to strengthen the internal audit function within companies. Interview by Vincent Huck

    read more

    French accountants pledge to tap into the advisory market

    The French professional body for accountants (Ordre des Experts-Comptables – OEC) launched its annual congress with 4,800 delegates in attendance, it is the OEC’s 72nd congress and this year the focus is on advisory.

    read more

    Non-financial reporting: the delayed revolution

    The now old debate about non-financial reporting has become more pressing for European accountants and firms, since the European Commission adopted guidelines specifically on this in June. Though the guidelines are not binding now, larger companies will have to comply with them by 2018. The aim is to allow investors as well as the wider public to compare data about social and environmental responsibility of the businesses they are investing in or supporting.

    read more

    Editor's letter: Big four, Big spin

    Tourists roaming the South African national parks generally have stars in their eyes at the mention of the Big Five. In safari terms, the Big Five are the poster boys of tour operators: the lion, the elephant, the Cape buffalo, the leopard and the rhinoceros. The term Big Five originates from hunting; those five animals were considered the hardest to hunt on foot in Africa.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.