The US Public Company Accounting Oversight Board (PCAOB) has censored and fined Crowe Mackay after it found the firm violated PCAOB standards and rules in 2014 and 2015.
Specifically, it has fined the Canadian firm $25,000 for its 2014 and 2015 audits of Hunt Mining Corp. (HMC), as well as violations of PCAOB quality control standards in the areas of client acceptance and continuance and engagement performance.
PCAOB standards require firms perform certain activities at the beginning of an audit, including procedures around the continuance of a client relationship and the specific audit engagement. Firms also need to evaluate where certain matters are important to the company’s financial statements and internal control over financial reporting.
According the PCAOB, when Crowe Mackay was first engaged as HMC’s auditor, it failed to exercise due care and professional scepticism, and failed to plan audit procedures to obtain sufficient appropriate audit evidence to provide a reasonable basis for the Firm’s audit report.
The Board added: “In particular, the Firm failed to evaluate relevant public information about matters important to the company's financial statements and internal control over financial reporting, namely HMC's most recent annual filings with the Canadian Securities Administrators, which stated that HMC was a registered "foreign private issuer for the purposes of United States federal securities laws."
As well as the fine, the PCAOB has also told the firm it need to improve its control policies and procedures, and establish a policy ensuring training around the identification of audit clients subject to PCAOB audit standards.