Top 100 accounting firm Haynie & Co. was fined $400,000 and two current and two former partners were fined a total of $190,000 by the Public Company Accounting Oversight Board (PCAOB) on Jan. 23 for subpar auditing and quality control failures.
The audit regulator found that Haynie partners Tyson Holman and Stevin Avis and ex-partners Anna Hrabova and Richard Fleischman each violated PCAOB rules and standards while serving as either engagement partner or engagement quality review partner on Haynie’s 2019 audit of George Risk Industries Inc. or Haynie’s 2019 audit of Investview Inc. The PCAOB said the Salt Lake City-based accounting firm also violated PCAOB rules and standards on these 2019 audits, as well as PCAOB quality control standards.
“The PCAOB means business when it comes to enforcing our standards to meet our mission of protecting investors,” PCAOB Chair Erica Williams said in a statement. “Where audit deficiencies reflect a deeper failure of a firm’s quality control system, the PCAOB will take action to impose accountability at both the firm level and the engagement team level.”
In its disciplinary orders, the PCAOB revealed that Holman and Avis—the engagement partners on the George Risk and Investview audits, respectively—failed to exercise due professional care and professional skepticism, failed to obtain sufficient appropriate audit evidence to support Haynie’s opinions, and failed to evaluate whether the financial statements were presented in conformity with the applicable financial reporting framework.
With respect to George Risk’s investments, Holman was aware of deficiencies in his testing approach identified during the PCAOB’s inspection of Haynie’s audit of George Risk’s 2017 financial statements. Despite this awareness, he followed a similar deficient testing approach during the 2019 George Risk audit, according to the PCAOB.
In addition, Hrabova and Fleischman—while serving as engagement quality review partners on the 2019 George Risk and Investview audits, respectively—failed to exercise due professional care and professional skepticism. As a result, they lacked an appropriate basis to provide their concurring approvals of Haynie’s audit reports being issued, the PCAOB said.
Haynie was found to have violated PCAOB quality control standards because the firm failed to:
- Effectively implement policies and procedures to provide reasonable assurance that the work performed by engagement personnel met applicable professional standards and regulatory requirements; and
- Establish policies and procedures to provide reasonable assurance that Haynie’s quality control policies and procedures were suitably designed and were being effectively applied, and that its system of quality control was effective.
Without admitting or denying the findings, Haynie and its current and former partners consented to the PCAOB’s sanctions, which included:
- $65,000 in fines each to Holman and Avis, who also received two-year bars from being associated persons of a registered public accounting firm;
- $30,000 in fines each to Hrabova and Fleischman, who also received one-year practice limitations;
- $400,000 fine to Haynie; and
- Requiring Haynie to engage an independent consultant to review and make recommendations concerning the firm’s system of quality control.
“The multitude of audit deficiencies in this case demonstrates that, where a firm’s quality control system is lacking, audit quality suffers,” said Robert E. Rice, director of the PCAOB’s Division of Enforcement and Investigations.