Monday, November 16, 2015

Spanish Audit Firm Settles PCAOB Proceeding for Failure to Report Disciplinary Actions

By Jacquelyn Lumb

BDO Auditores, S.L.P., an accounting firm headquartered in Madrid, Spain, and registered with the PCAOB, has settled charges that it failed to timely disclose certain reportable events on Form 3 as required by the Board’s rules. The firm was named as a respondent in two separate disciplinary proceedings initiated by Instituto de Contabilidad y Auditoria de Cuentas (ICAC), Spain’s auditor oversight authority, and failed to report those proceedings within 30 days as required. The Board censured BDO, imposed a civil money penalty of $10,000, and required the firm to establish policies and procedures to ensure compliance with its reporting requirements. BDO consented to the Board’s order without admitting or denying the findings (In the Matter of BDO Auditores, S.L.P., Release No. 105-2015-039, November 12, 2015).

Reports on Form 3. Under PCAOB Rule 2203, accounting firms must file a special report on Form 3 to report certain specified events, including a matter arising out of the firm’s conduct in the course of providing professional services for a client in which the firm becomes a defendant or a respondent in a civil or alternative dispute resolution proceeding initiated by a government entity, or in an administrative or disciplinary proceeding other than in a Board disciplinary proceeding. The services do not have to involve an audit.

Proceedings against BDO. According to the Board’s order, BDO became aware on or about May 11, 2012 that it had become a respondent in a disciplinary proceeding initiated by ICAC in which ICAC found that the firm violated certain auditing standards. The firm’s appeal to the Spanish Courts of Justice is currently pending. On or about February 27, 2014, the firm became aware that it had become a respondent in another proceeding initiated by ICAC. Those proceedings have not been concluded.

The firm failed to file a Form 3 with respect to either proceeding until May 5, 2015, after the PCAOB commenced its investigation and well after the 30-day reporting deadline.

Settlement. As part of the settlement, in addition to revising its policies and procedures to ensure compliance, the firm agreed to provide annual training with respect to the PCAOB’s reporting requirements. The order also requires the firm to assign the oversight of compliance with PCAOB reporting matters to a person who possesses adequate knowledge and experience and to have that person certify compliance with the order within 120 days.