Public Company Accounting Oversight board imposed civil penalty on the Public Accounting firm for violating the auditor independence rules.
Dean Dorton Allan Ford (DDAF) prepared the financial statements for a broker-dealer audit client for the year ended December 31, 2012. As a result, the Firm was not independent of the Broker-Dealer under auditor independence criteria established by the Securities Exchange Commission and made applicable by Exchange Act Rule 17a-5(f)(3) to audits of brokers and dealers.
The Firm nevertheless audited the financial statements and issued an audit report that the Broker-Dealer included with the financial statements it filed with the Commission. In the audit report, the Firm represented that the audit had been performed in accordance with Generally Accepted Auditing Standards (“GAAS”).
Because GAAS requires independence, however, that representation violated Rule 17a-5(i), which required the audit report to state whether the audit was made in accordance with GAAS
