PCAOB Sanctions PWR CPA LLP for Failing to Conduct Inquiries Regarding Fraud Risks and Other Repeated Violations

The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order sanctioning PWR CPA LLP (“PWR” or the “Firm”) for violations of PCAOB rules and standards in connection with its audit of Ainos, Inc. (“Ainos”) for the year ended December 31, 2022, as well as repeated failures to comply with PCAOB reporting requirements with respect to four additional issuer audits.

To protect investors, PCAOB standards require auditors to perform risk assessment procedures that are sufficient to provide a reasonable basis for assessing the risks of material misstatement, whether due to error or fraud, and designing further audit procedures. The PCAOB found that PWR failed to meet these requirements, thus increasing risk to investors.

“When auditors fail to appropriately evaluate fraud and other risks, they undermine investor protection,” said PCAOB Chair Erica Y. Williams. 

The violations committed by PWR include:

• Failing to perform required risk assessment procedures and not properly evaluating certain matters for determination as critical audit matters during its 2022 audit of Ainos;
• Failing to conduct inquiries of Ainos’ audit committee concerning fraud risks; and
• Failing to timely file nine required Form APs disclosing certain audit participants and failing to submit a required Form 3 to disclose that the firm had taken on as a partner an individual who had been barred by the SEC from practicing before it as an accountant. 

“Firm personnel must conduct audits in accordance with PCAOB rules and standards, particularly when evaluating potential fraud risks,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations. “This case is another example of the PCAOB holding firms accountable for violations of core PCAOB rules and standards.”

Without admitting or denying the findings, the Firm consented to the PCAOB’s order. The order:

• Censures the Firm;
• Imposes a $60,000 civil money penalty on the Firm; and
• Requires the Firm to undertake remedial measures to establish, revise, or supplement, as necessary, policies and procedures (including monitoring procedures) to provide the Firm with reasonable assurance that Firm personnel will comply with Board filing requirements and standards regarding communications with audit committees in an audit, prior to submitting any future PCAOB registration application, and to provide documented evidence of such actions with any future submission.

PCAOB enforcement staff members R. Davis Taylor, Celia Lawson, and Sina Mansouri conducted the investigation and were supervised by William Ryan and John Abell.

The PCAOB oversees auditors’ compliance with the Sarbanes-Oxley Act, provisions of the securities laws relating to auditing, professional standards, and PCAOB and SEC rules.

Further information about the PCAOB Division of Enforcement and Investigations is  available on the PCAOB website. Firms or individuals wishing to report suspected misconduct by auditors, or to self-report possible misconduct, may visit the PCAOB  Tips and Referrals page.

*****

About the PCAOB

The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers registered with the Securities and Exchange Commission, including compliance reports filed pursuant to federal securities laws.