Earlier this week, the US Public Company Accounting Oversight Board (PCAOB) announced a settlement with Baker Tilly, which censures the firm for ongoing deficiencies in its audit quality control systems and mandates that it engage an independent consultant to review and make recommendations on how to resolve them.
"Deficient quality control systems put investors at risk," said PCAOB Chair Erica Y. Williams. “The PCAOB will hold firms accountable for failures to maintain appropriate quality control systems and protect investors.”
During 2018 and 2019, PCAOB inspectors identified a number of shortcomings in Baker Tilly's engagement processes, including in its testing of internal controls and accounting estimates and in its execution of engagement quality reviews. Despite raising these concerns then, the PCAOB's 2021 and 2022 inspections found that the firm had failed to make effective changes, as evidenced by similar audit deficiencies.
Without admitting to or denying these findings, Baker Tilly agreed to a disciplinary order which, in addition to engaging an independent consultant, requires it to conduct training for all issuer audit staff and pay a fine of $500 thousand.
"Today's order should remind firms that an effective system of quality control is essential to the performance of quality audits," said Robert E. Rice, Director of the PCAOB's Division of Enforcement and Investigations. "If firms fail to maintain effective systems of quality control, we will hold them accountable."
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