The Public Firm Accounting Oversight Board censured PricewaterhouseCoopers’ Canadian agency and imposed a $750,000 penalty, saying over 1,200 staff shared solutions to assessments throughout necessary coaching programs on auditing, accounting {and professional} independence.
The PCAOB additionally required PwC Canada to arrange monitoring procedures to make sure its personnel bear the inner coaching and that it assessments “with integrity,” and that they’ve the technical proficiency required, based on Thursday’s settled disciplinary order, which was posted Friday. The CEO of the Toronto-based agency may even must certify that the agency has adopted the orders inside 120 days.
The order discovered that from no less than 2016 till early 2020, PwC Canada violated PCAOB guidelines and high quality management requirements by failing to ascertain insurance policies and procedures for administering and overseeing inner coaching assessments, together with assessments to assist the agency’s audit professionals fulfill necessities for sustaining their accounting certifications.
PricewaterhouseCoopers LLP constructing within the monetary district of Toronto, Canada
Brent Lewin/Bloomberg
“These high quality management failures prevented the agency from figuring out that greater than 1,200 agency professionals have been concerned in improper reply sharing — both by offering or receiving solutions — in reference to assessments for necessary inner coaching programs masking matters that included auditing, accounting {and professional} independence,” stated the PCAOB. “Greater than 1,100 of those professionals have been from the agency’s assurance observe.”
PwC Canada stated it has been taking steps to appropriate the issue because it grew to become conscious of the take a look at reply sharing. “In early 2020, it got here to our consideration that a few of our individuals, primarily junior-level assurance staff, shared on-line paperwork containing solutions to some inner assessments as a part of this extra coaching,” stated PwC Canada CEO Nicolas Marcoux in a press release. “Taking this severely, PwC Canada instantly opened an in depth investigation with the help of exterior sources and voluntarily disclosed this matter to the regulators. We now have since undertaken a number of remediation steps together with retraining, extra ethics coaching, monetary penalties, written warnings and terminations the place warranted.”
As a part of the agency’s personnel administration system, PwC Canada administers an inner coaching program for all its professionals. The coaching necessities fluctuate based on every skilled’s place, position and trade observe space. The inner coaching usually features a testing part.
Going again to no less than 2016, the PwC Canada used a web-based platform that allowed it to ship, observe and document completion of the necessary coaching and testing. The platform information the dates and instances when staff entry and full the necessary coaching and testing. The agency doesn’t credit score staff with finishing the coaching till they satisfactorily go the associated take a look at. PwC Canada required all its staff to take sure on-line programs, together with programs on sustaining skilled independence and performing skilled tasks with integrity. The programs embrace a testing part on the finish. The agency additionally administered a number of on-line programs associated to auditing and accounting that various based mostly on expertise degree. Lots of the audit-related programs embrace a testing part and are necessary for audit personnel.
Nonetheless, from no less than 2016 to early 2020, the PCAOB discovered that greater than 1,200 PwC Canada staff have been concerned in improper reply sharing associated to coaching assessments. They primarily shared solutions by utilizing a number of shared drives that professionals had created on the agency’s laptop community on which they posted the solutions for others to view and supply supplemental solutions. As well as, they shared solutions by sending emails with connected paperwork containing solutions to coaching take a look at questions, by offering solutions in exhausting copy paperwork, or by discussing solutions when taking assessments within the presence of others.
The situations of improper reply sharing primarily occurred in reference to assessments that have been a part of the agency’s necessary assurance coaching. The shared drives contained solutions to no less than 46 of the roughly 55 necessary assurance assessments, in addition to solutions to some necessary firm-wide assessments containing content material regarding skilled integrity {and professional} independence. The improper sharing of coaching take a look at solutions occurred amongst junior workers, managers, administrators and companions on the agency. After PwC Canada management discovered of the observe, the agency did an inner investigation and located the misconduct was widespread inside the audit observe, together with amongst those that carried out work on audits ruled by PCAOB requirements. At the least 1,100 professionals within the assurance observe have been concerned in sharing solutions.
Along with the $750,000 penalty levied by the PCAOB, Marcoux stated the agency agreed to a $200,000 penalty and sanctions from Canada’s audit regulator, the Canadian Public Accountability Board, however each board’s acknowledged that the agency labored carefully with them.
“Each CPAB and PCAOB credit score PwC Canada for extraordinary cooperation,” Marcoux stated within the agency’s media assertion. “Whereas we’re assured there was no affect or compromise to the standard of our audits as evidenced by our present inspection outcomes, we anticipate extra from all people in our agency.”
In 2019, one other Large 4 agency, KPMG, agreed to pay a $50 million penalty to the Securities and Trade Fee after the U.S. agency was caught sharing solutions to inner coaching exams, in addition to details about upcoming PCAOB inspections in 2016 and 2017. The case, which additionally concerned some former PCAOB officers, led to a shakeup on the PCAOB board. Extra lately, in September 2021, the PCAOB fined KPMG’s Australia agency $450,000 for sharing inner coaching examination solutions going again to 2016.