The Public Company Accounting Oversight Board imposed a $175,000 fine on Smythe LLP, a Canadian firm based in Vancouver, for violating its rules and quality control standards on four audits.
Smythe used the work of two public accounting firms not registered with the PCAOB — PKF Audisur and PwC Malta — for help with the audits. The board found that Smythe failed to evaluate the professional reputation of the unregistered firms with due professional care, even though it knew the unregistered firms handled over 20% of the total audit hours or incurred more than 20% of the total audit fees. In certain audits, participation by one of the unregistered firms far outstripped the PCAOB's material services threshold of 20%.
"Improper use of unregistered firms puts investors at risk, and the PCAOB will take action to hold firms accountable," said board chair Erica Williams in a statement Tuesday.
Without admitting or denying the findings, Smythe agreed to a
The firm pointed out that it has made changes since the PCAOB findings.
"The fine issued by the PCAOB solely relates to our interpretation of the rules relating to our use of external firms not registered with the PCAOB for two of our 2020/2021 U.S.-registered public company clients," said Smythe managing partner Bob Sanghera. "There was no impact to the financial statements or audit opinions. We have since clarified and addressed this issue moving forward. We respect the importance of our regulators, and have implemented several measures in the last 18 months to improve the quality of our public company audits. Quality is a core pillar of our firm, and we remain committed to delivering high-quality audits."
The PCAOB has been imposing more fines and censures against firms in the U.S. and abroad in recent years since Williams became its leader. Last month, it censured a small Canadian firm in the Vancouver area and fined its sole partner $30,000 (