backOn June 10, 2024, the PCAOB announced a settled disciplinary order sanctioning L&L CPAs, PA (the “Firm”), its President, Weixuan Tracy Luo (“Luo”), engagement partner Andy Chow (“Chow”), and engagement quality reviewer Robert Kinzer (“Kinzer”), for violations of PCAOB rules and standards.
According to the PCAOB, the Firm failed to (1) establish quality control policies and procedures to provide reasonable assurance that its personnel would comply with PCAOB requirements for identifying and communicating critical audit matters (“CAM”) and (2) timely file Form APs for two audits. The PCAOB alleged that Luo directly and substantially contributed to the Firm’s violations.
With respect to Chow and Kim, the PCAOB alleged violations of PCAOB rules and standards in connection with the audit of the financial statements of Sugarmade, Inc. (“Sugarmade”) for the fiscal year ended June 30, 2021. The PCAOB alleged that Chow failed to (1) obtain sufficient appropriate audit evidence to support the existence, valuation, presentation, and disclosure of a purported intangible asset that represented over 50% of Sugarmade’s total assets and (2) accurately describe in the audit report how the engagement team addressed a critical audit matter. Finally, the PCAOB alleged that Kinzer failed to perform his engagement quality review of the Sugarmade audit with due professional care and in accordance with PCAOB standards.
Without admitting or denying the findings, the Firm and three individuals consented to the PCAOB order against them. The PCAOB censured all the respondents and imposed civil monetary penalties as follows: (1) a $75,000 penalty to the Firm and Luo, jointly and severally; (2) a $50,000 penalty to Chow, (3) and a $25,000 penalty to Kinzer. Chow also agreed to a one year bar from being associated with a registered public accounting firm, and to complete 50 additional hours of continuing professional education (“CPE”) before seeking Board consent to terminate his bar. Kinzer agreed to limitations placed on his activities for one year and to complete 50 additional hours of CPE.
A copy of the announcement and link to the order can be found here.