PCAOB censures, bars partner for failing to cooperate

The Public Company Accounting Oversight Board sanctioned Natalie Murphy, a former partner at Heaton & Company, for violating PCAOB rules and standards and failing to cooperate with an inspection.

Murphy violated PCAOB Rule 4006, Duty to Cooperate With Inspectors, in an investigation concerning the state of audit documentation and the timing of audit procedures. When inspection staff informed Murphy of audits selected for review, she said the workpaper documentation for two of the selected audits was complete and just needed to be "compiled" in the firm's audit software, despite a substantial portion being incomplete at the time. Murphy also obtained additional evidence and performed substantive procedures for one of the audits days before providing them to staff, while improperly representing that all audit procedures had been completed prior to the issuance of the firm's audit report. 

In addition, Murphy violated an auditing standard, AS 1215, Audit Documentation, by failing to document modifications and additions made to the workpapers after their completion dates for two inspected audits, and by failing to timely assemble a complete and final set of documentation for the two inspected audits and three additional issuer audits.

Courtesy of PCAOB

"The respondent failed to comply with multiple PCAOB rules and standards, leading to the sanctions imposed by the Board today," Robert Rice, director of the PCAOB's Division of Enforcement and Investigations, said in a statement. "We will continue to pursue enforcement actions to address such violations and ensure that accountability is upheld at every level of the profession."

Without admitting or denying the findings, Murphy consented to the PCAOB's order, which:

• Censures Murphy;
• Imposes a $50,000 civil money penalty; and, 
• Bars her from being an associated person of a registered firm with the option to petition the PCAOB to terminate the bar after five years, provided she has completed 40 hours of continuing professional education, in addition to CPE requirements connected with any license she holds.

The PCAOB has increased its enforcement activity, according to a new report, even as it faces the prospect of being absorbed into the Securities and Exchange Commission.