PCAOB warns against altering audit documentation

By Ken Tysiac

The PCAOB cautioned Thursday that improper alteration of audit documentation can result in severe penalties.

In a staff audit practice alert, the board warned that firms and individuals have been sanctioned in past years for improperly deleting, adding to, or altering documentation in connection with a PCAOB inspection or investigation. Sanctions have included revocation of firms’ registrations and individuals being barred from auditing for registered firms.

Recently, the PCAOB has seen evidence that such actions have continued to occur, according to the alert. Enforcement staff members have discovered evidence that audit documentation has been improperly deleted, added to, or altered before being made available to PCAOB inspectors, without informing the inspectors of the alterations, the alert says.

The consequences of providing improperly altered audit documentation to PCAOB inspectors or investigators may be far more severe than the consequences of the PCAOB staff identifying the audit deficiency that the revisions attempt to hide, the alert warns.

The PCAOB staff is encouraging the leadership of firms and networks to reinforce the importance of complying with the PCAOB’s audit documentation requirements.

“PCAOB standards provide specific requirements for auditors to follow if they have legitimate reasons for making changes to audit documentation after the audit has been completed,” Martin Baumann, the PCAOB’s chief auditor and director of professional standards, said in a news release. “Auditors must follow those requirements for any changes made.”

The PCAOB staff is urging registered firms or individuals that become aware of improper alteration of audit documentation in connection with a PCAOB inspection or investigation to report that information to the PCAOB.

Ken Tysiac (ktysiac@aicpa.org) is a JofA editorial director.

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