The Public Company Accounting Oversight Board sanctioned Adeptus Partners and its partner Howard Krant for violations related to supervision, review and quality control.
Krant and the firm violated PCAOB rules and standards in connection with the audits of two issuers: Blockchain of Things and Applied UV.
"Substandard audit work and inadequate quality control put investors at risk," PCAOB Chair Erica Williams said in a statement. "When violations like these occur, the PCAOB will take enforcement actions to hold auditors and firms accountable."
The violations committed by Krant include failing to adequately supervise the engagement teams on the 2020 Blockchain of Things and Applied UV audits, including failing to review the workpapers or obtain computer access to review the workpapers. according to the PCAOB. Krant also failed to properly review the engagement team's work on deferred revenue for the Blockchain of Things 2021 audit to ensure appropriate audit evidence was obtained.
The firm was also sanctioned for failing to provide reasonable assurance engagement teams performed the audits in accordance with the applicable standards and regulations.
"The firm and one of its partners violated PCAOB standards in the conduct of the audits and failed to implement quality control policies and procedures to safeguard against these violations. The sanctions imposed by the board hold the respondents accountable for those failures," Robert Rice, director of the PCAOB's Division of Enforcement and Investigations, said in a statement.
Without admitting or denying the findings, Krant and the firm consented to the PCAOB's order, which:
- Censures both respondents;
- Imposes a $75,000 civil money penalty on the firm, and a $50,000 penalty on Krant;
- Suspends Krant from associating with a registered firm for one year; and,
- Requires the firm to hire an independent consultant to review and make recommendations to the firm's system of quality control.
