The Public Company Accounting Oversight Board sanctioned audit partner Heber Maughan for altering workpapers in two inspections and an investigation.
Maughan violated PCAOB Rule 4006, Duty to Cooperate With Inspectors; Rule 5110, Noncooperation with an Investigation; and AS 1215, Audit Documentation, by creating, modifying and backdating workpapers after their completion dates and providing them — without disclosing those changes — to PCAOB staff. He provided a total of five issuer audits, which were improperly altered, to inspectors during 2020 and 2023 inspections of his firm.
“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.”
Maughan also violated the PCAOB’s ethics rules, as his repeated misconduct violated his obligation to maintain integrity and not knowingly misrepresent facts under ET Section 102, Integrity and Objectivity.
“The respondent’s conduct was broad in scope, repeated in frequency, and calculated in nature,” Robert Rice, director of the PCAOB’s Division of Enforcement and Investigations, said in a statement. “The Board’s sanctions and charges against him, which include a permanent bar and ethics violations, are entirely warranted.”
Without admitting or denying the findings, Maughan consented to the PCAOB’s order, which censures Maughan, bars him from being associated with a PCAOB-registered firm and imposes a $10,000 civil money penalty. The Board would have imposed a penalty of $75,000 if it had not taken his financial resources into consideration.
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