PCAOB fines MGO $500,000 | Accounting Today
- Key Insight: See why the PCAOB penalized Top 100 firm MGO over its biotech client’s audit.
- Forward Look: Get ready for MGO to certify corrections to its quality control policies.
The Public Company Accounting Oversight Board imposed a civil money penalty on Top 100 Firm Macias Gini & O’Connell, and censured the firm and two of its partners over their audits of an unnamed biotech company that sold consumer beauty and health products before filing for bankruptcy.
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MGO is required to review and evaluate its quality control policies and procedures, and submit a report on them to the board. It will then need to certify that it has implemented any necessary corrections to its policies and procedures.
The order details a series of violations of PCAOB rules and standards in MGO’s audits of the unnamed company, including the firm failing to properly evaluate the client’s valuation of its intangible assets and goodwill.
It also says that Heiss, as engagement partner, failed to properly evaluate the company’s impairment of goodwill, and its ability to continue as a going concern. Hammon, the board said, failed to perform his review of the audit with due professional care.
Finally, the order said that MGO failed to put together a complete and final set of audit documentation, and failed to establish and monitor an effective system of quality control.
MGO issued an unqualified opinion on the company’s 2022 financial statements; within five months, the company filed for bankruptcy.
The firm and the two partners consented to the entry of the order, without admitting to the findings.
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