Indiana Firm Sanctioned for Auditor Independence Violations (1)

The US audit regulator on Wednesday imposed a $75,000 fine on Indiana-based accounting firm Blue & Co. LLC for auditor independence violations found in six audits of three issuer employee benefit plans in 2018 and 2019.

In a settled disciplinary order, the Public Company Accounting Oversight Board said that Blue & Co. allowed one of its partners to serve as engagement partner for certain audits after the same person had served as the engagement quality reviewer or engagement partner during 2013-2017 audits of the same three employee benefit plans.

According to auditor independence rules, “lead” and “concurring” partners are required to rotate off an engagement after a total of five years in either role and must be off the engagement for five years upon rotation, the PCAOB said in a statement.

Blue & Co. also allegedly violated quality control standards in failing to implement and monitor policies and procedures to ensure that its personnel would comply with auditor independence requirements, the board said.

The company settled with the board and consented to review and certify its auditor independence policies and procedures.

• The PCAOB separately sanctioned India-based K G Somani & Co. LLP and its engagement partner Anuj Somani for violations of audit and quality control standards. In a settled disciplinary order announced Tuesday, the regulator imposed a $175,000 fine and required the firm to engage an independent consultant and suspend the engagement partner. The firm failed to have policies and procedures relating to performing audits under PCAOB standards or monitoring its quality control system. Somani failed to perform necessary audit procedures before the firm’s audit report, to document the audit work, and to supervise the engagement team. K G Somani & Co. and Somani both settled with PCAOB and consented to a disciplinary order, according to the order.
• In a separate settled disciplinary order, the PCAOB imposed a $40,000 fine on Delaware-based accounting firm Ciro E. Adams, CPA, LLC and its partner Ciro E. Adams, CPA for violating the board’s rules and auditing standards during audits of Professional Diversity Network, Inc and Alpha Investment Inc. The regulator also revoked the firm’s registration and barred Adams from being an associated person of a registered public accounting firm. The firm and Adams both settled with the PCAOB and consented to a disciplinary order.

The firms didn’t immediately respond to requests for comment.