The Securities and Exchange Commission (SEC) charged accounting firm PricewaterhouseCoopers (PWC) on Monday with improper professional conduct in connection with 19 engagements on behalf of SEC-registered companies, and of violating auditor independence rules.
The firm is said to have violated auditor independence rules by undertaking prohibited non-audit services during an audit engagement. Among other things, PwC exercised decision-making authority in the design and implementation of software relating to a client's financial reporting and engaging in management functions.
PwC agreed to pay $7.9 million to settle the charges.
The SEC said the firm conducted non-audit services for 15 SEC-registered companies, violating Public Company Accounting Oversight Board (PCAOB) Rule 3525.
The rule requires an auditor to describe in writing to the company's audit committee the scope of work, discuss with the committee the potential effects of the work on independence, and document the substance of the independence discussion.
"Auditors play a fundamental role in protecting the reliability and integrity of financial reporting and must ensure that non-audit services do not come at the cost of their independence on audits of public companies," said Anita Bandy, associate director of the SEC's Division of Enforcement. "PwC repeatedly provided non-audit services without having effective quality controls in place for monitoring whether the services impaired its independence on audit engagements and were properly disclosed to audit committees."
PwC agreed to be censured and to pay disgorgement of $3,830,213, plus prejudgment interest of $613,842 and a civil money penalty of $3.5 million.
The SEC also charged PwC partner Brandon Sprankle with causing the firm's independence violations. He agreed to pay a civil money penalty of $25,000 and to be suspended from appearing or practicing before the SEC, with a right to reapply for reinstatement after four years.