Brock Schechter cited by accounting board

June 1, 2012 Updated Jun 1, 2012 at 6:13 AM EDT

By WKBW News
By Brock Schechter cited by accounting board

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June 1, 2012 Updated Jun 1, 2012 at 6:13 AM EDT

The Public Company Accounting Oversight Board determined this month that Brock Schechter & Polakoff LLP failed to comply with quality control standards related to audit work performed for three companies in China and Taiwan, according to a May 22 order issued by the agency. Regulators say the CPA firm - and, more specifically, former partner and director of accounting and auditing James Waggoner - "had no prior experience" auditing public companies based in either location as per PCAOB auditing standards.

The audits were not performed by the firm, but rather two other audit firms - one in China and one in Taiwan - hired by Brock Schechter & Polakoff, the PCAOB said. The firm "had minimal contact with the foreign firms and performed an inadequate review" of the documents prepared by the other firms, the agency said.

As a result, the firm's registration with the PCAOB is being temporarily revoked, meaning it cannot perform audits for public companies, and it must pay a $20,000 fine.

Brock Schechter & Polakoff may reapply for registration with the PCAOB in two years. The firm has neither admitted nor denied the charges.

Managing partner Thomas Grogan on Thursday issued a statement about PCAOB's findings.

He said the firm "immediately implemented corrective measures" when it was informed by the PCAOB of "certain deficiencies" related to the work in China and Taiwan.

"The firm made a decision to voluntarily exit this area of auditing and has not performed work of that nature for more than a year," he said. "(Brock Schechter & Polakoff) does not foresee a return to that area of auditing in the future."

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