US audit watchdog censures, fines Canadian accounting firms Crowe MacKay, Grant Thornton

TORONTO, September 29, 2024 – The Public Company Accounting Oversight Board in the United States has censured and fined two Canadian accounting firms. Crowe MacKay LLP, which is headquartered in Vancouver, and Grant Thornton LLP, which is headquartered in Toronto, have been fined US$30,000 each for violation of PCAOB rules. 

PCAOB Chair Erica Williams was appointed in 2021 and the audit watchdog's board was overhauled.

Crowe MacKay and Grant Thornton were two of four international firms caught in an “enforcement sweep” for their failure “to make certain required communications with audit committees.” In a statement, PCAOB Chair Erica Y. Williams stated: “The PCAOB will continue to hold firms accountable for providing audit committees, the PCAOB, and the public with important information to help keep investors protected.” 

Under the Sarbanes-Oxley Act, registered accounting firms outside the United States are subject to PCAOB inspections in the same manner as US firms. Since the inception of the PCAOB's international inspection program in 2004, the PCAOB has conducted inspections of one or more registered firms located in more than 50 non-U.S. jurisdictions, including Canada. Crowe MacKay was inspected in 2022 and Grant Thornton inspected in 2021. 

Crowe MacKay

According to its discipline order, Crowe MacKay was censured over its audits of two companies, GreenPower Motor Company Inc., and an unidentified therapeutics company referred to as “Issuer A.” In violation of PCAOB rules, the accounting firm failed to document pre-approval from the audit committees of both GreenPower and Issuer A to provide tax return preparation and consent services. It also failed to document (“describe in writing”) aspects of the audit engagement for Greenpower Motor. 

The firm submitted a settlement offer without admitting or denying the findings in the PCAOB order. Crowe MacKay also too action to change its policies and procedures for the purpose of providing assurance in the future to the PCAOB. 

Grant Thornton 

According to its discipline order, Grant Thornton was censured over its audit of Patagonia Gold, a mining company incorporated in British Columbia and headquartered in Buenos Aires, Argentina. During its Grant Thornton Canada’s audit, an affiliate, Grant Thornton UK, was performing  tax return preparation services for a subsidiary of Patagonia. Grant Thornton Canada failed to document pre-approval from Patagonia’s audit committee for Grant Thornton UK to provide these tax return preparation services. 

The Canadian firm also failed to describe in writing to Patagonia’s audit committee the scope of the tax return preparation services, the fee structure for the engagement, and any oral agreement between Grant Thornton Canada and Patagonia relating to the tax services. 

The firm also submitted a settlement offer without admitting or denying the findings in the PCAOB order. As detailed in its order, Grant Thornto took action by providing training for its partners concerning documentation of preapproval communications with the audit committees of issuer clients, among other changes to policies. 

“This latest round of orders shows that firms cannot neglect their responsibilities to keep audit committees informed and report required information to the PCAOB,” said Robert E. Rice, director of the PCAOB’s Division of Enforcement and Investigations in a press release. “The PCAOB will bring disciplinary actions to reinforce the importance of these obligations, as set forth in our rules and standards.” 

Colin Ellis is a contributing editor to Canadian Accountant.