PCAOB sanctions Canadian firm over noncooperation with inspections

The Public Company Accounting Oversight Board posted a settled disciplinary order Tuesday sanctioning Hay & Watson, a firm in Vancouver, Canada, and its owner and managing partner, Essop Mia, for violating PCAOB rules and standards during a 2019 audit and then failing to cooperate with a PCAOB inspection. 

The PCAOB found that Mia, who was listed as engagement partner, failed to assemble a final set of documentation for the audit, and then he and colleagues at the firm improperly altered, added to and backdated work papers months after the deadline for assembling a complete and final set of audit documentation and shortly before a PCAOB inspection. Mia and the firm violated PCAOB rules, according to the PCAOB, by providing the altered work papers to PCAOB inspectors without disclosing they had been altered. 

Mia declined to comment when contacted by Accounting Today, but said a settlement was in process.

"Inspections serve an important role in protecting investors and improving the quality of audit services," said PCAOB Chair Erica Y. Williams in a statement. "Backdating signoffs and modifying documents in advance of an inspection undermines the PCAOB's ability to inspect registered firms and warrants significant board sanctions." 

The move comes as the PCAOB has announced stricter enforcement and inspections for firms under Williams' leadership, including with firms abroad. The PCAOB recently signed a preliminary agreement to inspect firms in China after years of effort (see story).

The PCAOB censured Hay & Watson as well as Mia, and permanently barred him from associating with a PCAOB-registered accounting firm. The board also permanently revoked the firm's registration, and imposed a $50,000 civil money penalty on both the firm and Mia.