Fifth BC accounting firm censured by audit regulator CPAB thus far in 2023
WDM Chartered Professional Accountants censured by the Canadian Public Accountability Board, which has released seven enforcement actions this year
TORONTO, Nov. 11, 2023 – British Columbia accounting firm WDM Chartered Professional Accountants has been prohibited from accepting new medium and high-risk public companies, or “reporting issuers,” as clients. WDM is the sixth accounting firm in the province out of seven overall to be censured by the Canadian Public Accountability Board.
WDM, otherwise known as Watson Dauphinee & Masuch, Chartered Accountants, is based in Vancouver and was founded in 1981. Richard (Rick) Dauphinee, one of the founding partners, died in February of this year.
According to its enforcement action, CPAB found three significant inspection findings in its audit inspection, each of which constituted a “violation event,” and has found significant inspection findings over its last three consecutive inspections (in 2019, 2022 and 2023) of WDM. CPAB has listed eight violations of Canadian Auditing Standards in its action, one of which is "The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements."
In addition to the public censure and restrictions on new audit clients, CPAB has required WDM to implement a variety of measures aimed at improving audit quality. These include enhanced oversight such as monthly meetings, the appointment an engagement quality reviewer, the development of an audit quality plan and more.
WDM disciplined by US audit watchdog prior to CPAB enforcement
In 2021, the Public Company Accounting Oversight Board in the United States revoked the registration status of WDM, and barred the sole and managing partner of the firm. The censure states that, “during the period from 2009 through 2017, PCAOB inspectors conducted four inspections of the Firm and raised concerns about several significant deficiencies in its system of quality control including in the areas noted above.”
In its enforcement action, the PCAOB identifies the audit of a Vancouver financial technology services company, “Issuer A,” as the source of violations of US accounting rules and quality management deficiencies. In 2019, the PCAOB issued a discipline order against WDM, over its audit of a Vancouver company called Digatrade.
As reported earlier this year by Investment Executive, the Securities and Exchange Commission in the United States secured final judgments in a U.S. district court against Digatrade Financial, “ordering them to pay over US$3.4 million in disgorgement, penalties and interest (SEC) for orchestrating a micro-cap fraud scheme.”
According to Business in Vancouver, the company was a co-defendant in an alleged “pump and dump” scheme, involving a “boiler room” based in Columbia.
The Canadian Public Accountability Board has censured seven accounting firms this year. Five have been based in British Columbia. The remaining two comprise Marcum LLP, which is based in the United States, and PKF Antares Professional Corporation, which is based in Alberta.
Colin Ellis is a contributing editor to Canadian Accountant.