A Texas accountant has been billed with doing an audit for a general public company even although his company was not registered with the General public Enterprise Accounting Oversight Board.
The U.S. Securities and Trade mentioned Christopher Knauth’s fiscal 2018 audit of tech company Zenergy Brand names — the very first he had at any time done for a general public company — also unsuccessful to comply with multiple PCAOB auditing criteria.
Plano, Texas-based mostly Zenergy, a developer of vitality-conservation products and solutions and providers, submitted for Chapter 11 individual bankruptcy in Oct 2019.
“As gatekeepers, auditors conduct a significant job in protecting trader self-assurance in issuers’ economic statements. Registration with the PCAOB and compliance with PCAOB auditing criteria are necessary to this gatekeeping purpose,” Carolyn Welshhans, affiliate director of the SEC’s Division of Enforcement, mentioned in a news release.
General public businesses are necessary to file stories with the commission that have been audited by an independent general public accountant registered with the PCAOB.
Knauth co-started Evans & Knauth in Oct 2017 but according to the SEC, it was not registered with the PCAOB when Zenergy employed the company in June 2018 and Knauth unsuccessful to entire a registration by the time he done the audit.
“The audit report signed by [Evans & Knauth], by way of Knauth, falsely mentioned that ‘[w]e are a general public accounting company registered with the [PCAOB],’” the SEC mentioned in an buy instituting administrative proceedings.
The get the job done Knauth done on the audit and quarterly critiques for Zenergy allegedly unsuccessful to comply with PCAOB criteria mainly because, amid other things, he unsuccessful to correctly plan the audit and detect and evaluate risks of content misstatement, exercise thanks expert care and expert skepticism, attain enough proper audit evidence, and get ready ample audit documentation.
“It appears from the present documentation that Knauth basically attained particular restricted paperwork from [Zenergy] and did not conduct additional evaluation enough to detect and properly evaluate the risks of content misstatement or exercise enough expert skepticism, which includes by conducting additional questioning,” the SEC mentioned.
Corporation information show Evans & Knauth was dissolved in September 2020.