The Public Company Accounting Oversight Board (PCAOB) has imposed sanctions on Kesselman & Kesselman C.P.A.s, a member firm of PricewaterhouseCoopers International (PwC Israel).
The firm is penalised for breaching PCAOB quality control standards, particularly concerning integrity and personnel management, over a span of five years, from 2017 to 2022.
During this time, PwC Israel failed to identify or prevent widespread improper sharing of answers in mandatory internal training tests.
Throughout the five-year period, a number of PwC Israel staff members engaged in sharing test questions and answers improperly.
This occurred during online tests for mandatory internal training courses that covered US auditing practices, professional independence, and ethics.
PCAOB chair Erica Williams said: “The PCAOB will not tolerate cheating or other unethical behaviour at PCAOB-registered audit firms, regardless of whether the firm is located in the US or abroad.
“We will hold firms accountable when they put investors at risk by failing to comply with the PCAOB’s quality control standards.”
The PCAOB has been proactive in addressing similar issues across the sector, having sanctioned ten registered firms since 2021 for quality control deficiencies related to inappropriate answer sharing on internal exams.
PwC Israel, without admitting or denying the PCAOB’s findings, has consented to pay a $2.75m (NIS9.81m) civil penalty.
In addition to the financial penalty, the PCAOB censured the firm and mandated a review and enhancement of its quality control policies and procedures.
PwC Israel is expected to ensure that its personnel maintain integrity during internal training and report back to the PCAOB within 150 days.
The investigation leading to the sanctions was conducted by PCAOB enforcement staff members David Florenzo, Thomas McCann, and Tiffany Johnson, under the supervision of William Ryan and John Abell.
The PCAOB is responsible for monitoring auditors’ compliance with the Sarbanes-Oxley Act, relevant securities laws, professional standards, and both PCAOB and SEC regulations.
This action follows the US PCAOB’s recent withdrawal of two proposed disclosure rules after consultations with the SEC.
