backOn October 22, 2024, the PCAOB approved a settled disciplinary order sanctioning the New Jersey audit firm Yusufali & Associates LLC (“Firm”) and its sole partner Yusafali Musaji (“Musaji” and collectively with the Firm, “Respondents”) for multiple violations of PCAOB rules and standards in connection with four audits for two separate issuers between 2019 and 2021.
The PCAOB found that the Respondents failed to (1) obtain sufficient appropriate audit evidence in connection with testing revenue and inventory in two issuer audits; (2) obtain sufficient appropriate audit evidence in connection with testing revenue, convertible notes payable, and advances in two issuer audits; (3) perform sufficient procedures to address fraud risk in each of the four issuer audits; (4) determine whether there were critical audit matters for three audits; (5) make certain required audit committee communications in three audits; (6) comply with audit documentation requirements for each of the audits; and (7) cooperate with a Board inspection in August 2022 in connection with two of the audits by submitting improperly altered audit documentation to PCAOB inspectors.
In addition, the PCAOB found that the Firm had also failed to (1) obtain engagement quality reviews for any of the four audits, and improperly permitted the issuers to use the Firm’s audit reports without having obtained concurring approval of issuance from an engagement quality reviewer; (2) to file Form AP in connection with each of the four issuer audits; and (3) to establish policies and procedures sufficient to provide reasonable assurance that its personnel would comply with applicable professional standards and regulatory requirements, and undertake only those engagement that it could reasonably expect to complete with professional competence.
Both the Firm and Musaji consented to a disciplinary order with the PCAOB that (1) censured the Respondents; (2) revoked the Firm’s registration with a right to reapply for registration after three years; (3) barred Musaji from being an associated person of a registered firm with a right to petition the Board to terminate the bar after three years; (4) imposed a civil money penalty of $50,000, jointly and severally, on the Firm and Musaji; (5) required the Firm to undertake remedial actions to improve its system of quality control before reapplying for registration; and (6) required Musaji to complete 50 hours of additional continuing professional education before seeking to terminate his bar.