Audit Firm Charged with Back-Dating Audit Work Papers Provided to SEC and PCAOB
April 24, 2020
File No. 3-19767
April 24, 2020 - The SEC today instituted administrative proceedings concerning the SEC Enforcement Division's (Division) allegations that PLS, CPA, A Professional Corporation, and three of its individual auditors, Chang G. Park, CPA, Joseph Yongyun Lee, CPA, and Juchi, Lee, CPA, engaged in improper professional conduct in connection with audit reports issued by PLS for at least four issuers.
As detailed in the SEC's Order Instituting Proceedings (OIP), the Division alleges that the individual auditors failed to prepare a complete set of audit documentation and added work papers after the corresponding audit reports were issued and after the time allowed under Public Company Accounting Oversight Board (PCAOB) auditing standards to complete the audit documentation had passed. The Division further alleges that the auditors back-dated those documents to make it appear as if they had been completed on or before the date of the corresponding PLS audit report. According to the OIP, the Division also alleges that PLS and the individual auditors failed to obtain or perform adequate engagement quality reviews and to exercise due professional care. As alleged, PLS issued audit reports that falsely stated the audits had been performed in accordance with generally accepted auditing standards, and PLS and the auditors attempted to conceal their auditing deficiencies by, for example, back-dating documents that they provided to the SEC and the PCAOB.
The Division alleges that PLS and the individual auditors engaged in improper professional conduct under Section 4C(A)(2) of the Securities and Exchange Act of 1934 and Rule 102(e)(1)(ii) of the SEC's Rules of Practice. The Division also alleges that PLS and the individual auditors willfully violated, or willfully aided and abetted violations of, the federal securities laws under Section 4C(A)(3) of the Exchange Act and Rule 102(e)(1)(iii) of the SEC's Rules of Practice. Specifically, as alleged, PLS willfully violated, and the individual auditors willfully aided and abetted and caused PLS's violations of, Rule 202(b)(1) of Regulation S-X, and PLS and the individual auditors willfully violated PCAOB Rules 3500T and 4006.
The investigation was conducted by Marisa Westervelt and Christopher Conte and supervised by Spencer E. Bendell and Rhoda Chang. The Enforcement Division's litigation will be led by Amy J. Longo. The Division of Enforcement acknowledges the assistance of the PCAOB.