The Public Company Accounting Oversight Board today announced settled disciplinary orders sanctioning Raines & Fischer and three of its partners — William Fischer, Brian Uhlman and Steven Sarrel — for attempting to deceive PCAOB inspection staff and other violations.
Firm personnel improperly created and modified workpapers after document completion dates and in anticipation of PCAOB inspections in 2020 and 2022, violating PCAOB Rule 4006, "Duty to Cooperate with Inspectors," and AS 1215, "Audit Documentation." The personnel concealed the altered workpapers before they were provided to inspectors, taking steps such as changing computer clocks and printing documents to PDF.
"Attempting to deceive the PCAOB's inspection staff undermines investor protection," PCAOB chair Erica Williams said in a statement. "To protect investors and safeguard the integrity of the inspection process, the PCAOB will continue to pursue disciplinary action against firms and individuals that fail to cooperate with inspections."
Sarrel and Uhlman also violated Rule 4006. Sarrel was responsible for the alteration of workpapers prior to the 2020 inspection of a broker-dealer engagement for which he was engagement partner. Uhlman was responsible for the alteration of workpapers prior to the 2022 inspection of two broker-dealer engagements for which he was engagement partner. Neither partners informed the inspectors of the alterations, despite participating in meetings with PCAOB staff during the inspections.
Fischer was the firm's managing partner and in charge of its audit department and quality control during this period. He took no action, despite being aware in both instances of the alterations, and failed to prevent the altered workpapers from being provided to PCAOB staff.
The PCAOB found that Raines & Fischer's quality control system was deficient. The firm also violated documentation standards by failing to assemble for retention complete and final sets of workpapers for four broker-dealer engagements in addition to the three subject to inspection. The firm also repeatedly violated PCAOB Rule 2201 by falling to timely file its Form 2 for four consecutive years.
Uhlman additionally failed to comply with audit and attestation standards related to the audit and examination of carrying a broker-dealer. During that engagement, he failed to test key internal controls over compliance and supplemental information included in the schedules supporting the broker-dealer's financial statements.
Fischer also violated AS 1220, "Engagement Quality Review," by falling to perform adequate engagement quality reviews for seven broker-dealer engagements. He also violated PCAOB Rule 3502, "Responsibility Not to Knowingly or Recklessly Contribute to Violations," by contributing to the firm's noncooperation for both inspections and its violations of rules and standards.
"These respondents were responsible for a host of audit and attestation deficiencies and compounded those violations with their attempts to conceal the shortcomings in their work from the PCAOB's inspectors. That misconduct warrants the strong sanctions imposed in the orders issued by the Board today," Robert Rice, director of the PCAOB's Division of Enforcement and Investigations, said in a statement.
The sanction is the latest in a long line of increased enforcement efforts by the PCAOB, most recently including
Without admitting or denying the findings, all four respondents consented to their respective orders:
- Censure each respondent;
- Permanently revoke the firm's registration;
- Bar Uhlman from associating with a PCAOB-registered firm with a right to petition the Board to terminate the bar after five years (and requiring additional CPE requirements prior to petitioning);
- Bar Fischer and Sarrel from associating with a registered firm with the right to petition to terminate the bars after three years; and,
- Impose civil money penalties of $200,000 on the firm, $125,000 on Uhlman, $75,000 on Fischer, and $65,000 on Sarrel.
