PCAOB fines K G Somani over audit quality lapses

Aug 10, 2023

The Public Company Accounting Oversight Board (PCAOB) announced a $125,000 penalty against India-based audit firm K G Somani & Co. (KGS) for alleged violations of quality control standards.

The firm failed to put in place policies and procedures to provide reasonable assurance its personnel would comply with standards regarding audit performance, supervision, and documentation, according to the PCAOB’s order. These apparent deficiencies were exacerbated by the alleged misconduct of Anuj Somani, an engagement partner at KGS accused of failing to perform audit procedures and document work regarding the firm’s opinion on the internal control over financial reporting of software provider Ebix.

Somani was fined $50,000 and suspended from associating with a registered public accounting firm for one year, the PCAOB announced Tuesday.

KGS did not immediately respond to a request for comment.

The PCAOB announced two other enforcement actions against smaller firms on Wednesday.

Blue & Co. was fined $75,000 for allowing an engagement partner to serve on the audits of three employee benefit plans during 2018 and 2019 despite working on those audits from 2013-17, a violation of the PCAOB’s auditor independence rules. The firm was faulted for not having policies and procedures to reasonably ensure compliance with the requirements to rotate off engagement partners after five years.

Blue did not immediately respond to a request for comment.

A separate PCAOB action saw Ciro E. Adams fined $40,000 and have its registration revoked for alleged deficiencies regarding due professional care and skepticism that led to unqualified opinions with respect to the audits of two issuers. The firm’s sole partner, Ciro E. Adams, was barred from being an associated person of a registered public accounting firm for two years.

Ciro did not immediately respond to a request for comment.

[Compliance Week]