The Public Company Accounting Oversight Board on Feb. 11 imposed a permanent bar and a $10,000 fine on audit partner and CPA Heber Maughan for improperly altering workpapers before providing them to PCAOB inspectors in two inspections and to the regulator’s enforcement staff during a related investigation.
According to the PCAOB, Maughan, who was the engagement partner on every issuer audit conducted by the accounting firm MaughanSullivan, violated PCAOB Rule 4006, Duty to Cooperate With Inspectors, PCAOB Rule 5110, Noncooperation with an Investigation, and AS 1215, Audit Documentation, by creating, modifying, and backdating workpapers after applicable documentation completion dates and providing them—without disclosing the alterations—to PCAOB staff.
The PCAOB found that Maughan provided improperly altered workpapers for a total of five issuer audits to inspectors during 2020 and 2023 inspections of MaughanSullivan. After PCAOB enforcement staff opened an investigation relating to those inspections, Maughan also provided the investigators with the same five sets of improperly altered audit workpapers, as well as improperly altered audit documentation for three additional issuer audits.
When Maughan created and modified workpapers before providing them to inspectors, he did so several months after the documentation completion dates by which those workpapers should have been finally assembled, the PCAOB said. Some of his modifications were to apply sign-off dates that inaccurately suggested he had prepared the workpapers during the original audits—and not several months after. The three additional sets of altered documentation that Maughan provided to PCAOB enforcement staff contained newly created workpapers, as well as modifications made more than two years after the documentation completion dates for those audits.
In addition, Maughan violated the PCAOB’s ethics rules, which require that, in the performance of any professional service, an associated person of a registered accounting firm maintain integrity and “not knowingly misrepresent facts.”
“The work of PCAOB inspectors and investigators is critical to investor protection, and our rules make clear that auditors are prohibited from improperly modifying audit documentation in connection with inspections and investigations,” PCAOB Chair Erica Williams said in a statement. “To protect investors, the PCAOB will hold auditors accountable when they attempt to thwart PCAOB processes.”
Without admitting or denying the findings, Maughan consented to the PCAOB’s order, which censures him; bars him from associating with a PCAOB-registered firm; and fines him $10,000. Based on Maughan’s conduct, the board said it would’ve imposed a civil money penalty of $75,000 if it had not taken his financial resources into consideration.
“The respondent’s conduct was broad in scope, repeated in frequency, and calculated in nature. The board’s sanctions and charges against him, which include a permanent bar and ethics violations, are entirely warranted,” said Robert Rice, director of the PCAOB’s Division of Enforcement and Investigations.
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Tags: Accounting, accounting firms, fines, PCAOB, PCAOB enforcement
Craig Benoit February 14 2025 at 8:37 am
This is a glaring issue with self policing professional boards. No criminal prosecution and a failure to provide information about all parties impacted. The perpetrator is free to engage in the same activities behind the mask of others.