SEC Charges Audit Firm, Individual Auditors with Back-Dating Audit Work Papers

ADMINISTRATIVE PROCEEDING
File No. 3-19767

July 9, 2021 - The Securities and Exchange Commission today announced settled enforcement actions against PLS CPA, A Professional Corporation (PLS), and three California-based CPAs associated with PLS, charging improper professional conduct, including backdating audit work papers and other misconduct in connection with audit reports for at least four issuers.

According to today's order by the Commission, PLS and three auditors, Chang G. Park, Joseph Yongyun Lee, and Juchi Lee, failed to prepare and retain a complete set of required audit documentation and inappropriately added documents to audit work papers after the audit reports had been released and the applicable documentation completion date under Public Company Accounting Oversight Board (PCAOB) auditing standards had passed. The order found that the auditors backdated those documents to make it appear as if they had been completed on or before the date of the corresponding PLS audit report. The order also found that PLS and the individual auditors failed to obtain or perform adequate engagement quality reviews and to exercise due professional care in connection with PLS's client's audits. According to the order, PLS's audit reports falsely stated the audits had been performed in accordance with PCAOB standards. The SEC further found that PLS and the auditors intentionally attempted to conceal their auditing deficiencies by backdating documents provided to the Commission or the PCAOB.

The SEC's order found that PLS and the individual auditors engaged in improper professional conduct and willfully violated, or willfully aided and abetted and caused violations of, Rule 2-02(B)(1) of Regulation S-X and PCAOB Rules 3500T and 4006. Without admitting or denying the findings, the respondents consented to cease and desist orders imposing bars from appearing or practicing before the Commission as accountants, civil penalties, and from PLS, disgorgement with prejudgment interest.

The SEC's investigation was conducted by Marisa Westervelt and Christopher Conte, and supervised by Spencer E. Bendell and Rhoda Chang, and the litigation was led by Amy J. Longo and Ms. Westervelt, all of the Los Angeles Regional Office. The Division of Enforcement acknowledges the assistance of the PCAOB.