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Idiot Who Backdated Work Papers Will Never Work in This Town Again

Posted on by Going Concern News Desk

The PCAOB is busy sniffing out poor audit behavior to remind everyone to be on their game and don’t get caught doing boneheaded things like faking your audit homework because the PCAOB test is tomorrow. Look, the audits don’t have to be perfect. They just have to be performed correctly.

Now this guy is permanently banned so I guess the upside here is that he’ll never have to worry about another PCAOB inspection. From the PCAOB news release:

The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order(PDF) sanctioning Hay & Watson and its owner and managing partner, Essop Mia, for violations of PCAOB rules and standards in connection with a 2019 audit and their subsequent failure to cooperate with a PCAOB inspection.

The PCAOB found that Mia, who served as the engagement partner, failed to assemble a final set of audit documentation for the audit, in violation of applicable auditing standards. Instead, Mia, and others acting at his direction, 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 Board inspection. Mia and the firm violated PCAOB rules by providing these altered work papers to the Board’s inspectors without disclosing that they had been altered.

The Board censured Hay & Watson and Mia, permanently barred Mia from associating with a PCAOB-registered accounting firm, permanently revoked Hay & Watson’s registration, and imposed a $50,000 civil money penalty jointly and severally on the firm and Mia.

“Faced with an incomplete audit file and an upcoming inspection, Mr. Mia made the wrong choice in directing his staff to alter and backdate documents,” said Patrick Bryan, Director of the PCAOB’s Division of Enforcement and Investigations. “This action sends a strong message that partners and firms must take their obligations to cooperate with Board inspections seriously.”

Kids, if the engagement partner hints at altering audit documents you RUN. Or just send them this.

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As you may have heard, PCAOB Chairman Jim Doty gave a speech at the University of Southern California yesterday where he discussed among other things, the possibility of mandatory auditor rotation and changing the standard auditor’s report. The prospect of these two changes aren’t exactly something auditors are stoked about but some people are of the opinion that a) auditors like to get a little too chummy with their clients which leads to b) not taking the “independence” thing too seriously and c) the auditor’s report, in its current form, its pretty much worthless.

You can read Doty’s entire speech over at the PCAOB website where touches on all of these but here’s one example around independence that probably qualifies for, in Doty’s words, “[an] approach [to] the audit with an inappropriate mindset”

[An] audit partner’s self-assessment claimed that he “overcame long-standing barriers against non-audit services at [two audit clients] with a series of well-planned meetings and supporting presentations with the Audit Committee Chair, the full Audit Committee, the CEO and the CFO at both companies.”

In response, his reviewing partner noted that he was –

highly alert to cross service line opportunities and has successfully penetrated both of his accounts where few services had been
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Anyway, there are other stories of bad auditor behavior, so check the whole speech if you feel so inclined. And while Chairman Doty admitted that “We don’t see these problems in all the files we look at,” it causes he and others to wonder if “these audit partners are unaware of, or simply unconcerned about, the independence rule that should make such considerations irrelevant to their compensation, and why a firm would allow such unawareness or unconcern to continue unabated.”

So flagrantly bending the rules to the point where they might as well be breaking or stupidity? Neither is too flattering.

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