• Register
Return to: Home > News > PCAOB announces $1m settlement with Indonesian EY member

PCAOB announces $1m settlement with Indonesian EY member

The Public Company Accounting Oversight Board (PCAOB) has announced that it has censured and imposed a $1m civil penalty on KAP Purwantono, Suherman & Surja an Indonesian member of EY global network.

The settlement was regarding audit failure, non-cooperation, and violations of Quality Control Standards. Two audit partners were sanctioned following the investigation over their roles in the failure, including a former practice director for EY’s Asia Pacific region, James Randall Leali, and a former engagement partner, Roy Iman Wirahardja.

The case involved the 2011 audit of an Indonesian telecommunications company. An EY partner, in the US, informed the engagement partner of the failures while performing a review required by PCAOB standards. Despite the review partners concerns, the practice director authorised the engagement partner to release the audit report.

The company failed to provide sufficient evidence to support the accounting for more than 4,000 leases for spaces on cellular towers. EY Indonesia then released its audit opinion without obtaining completed analysis.

Wirahardja was censured and fined $20,000, with a five year ban from any association with a PCAOB registered firm. Leali was also censured and fined $10,000, with a one year restriction. Neither admitted or denied the allegations.

PCAOB chairman, James R. Doty said: “Reliable audits are critical to providing investors a basis for confidence to participate in U.S. public capital markets. PCAOB standards and oversight are key protections for investors in U.S. securities.”

Dozens of new audit work papers were created improperly by members of the EY Indonesia engagement team shortly before the 2012 PCAOB audit inspection. EY Indonesia and the engagement partner did not cooperate with the Board's inspection and investigation.

"In their haste to issue audit reports for their client, the firm and two partners shirked their fundamental duty to obtain sufficient audit evidence," said Claudius B. Modesti, director of the PCAOB Division of Enforcement and Investigations.

Top Content

    Improving public sector management and performance: the case for accrual accounting

    Public sector management (PSM) is about ensuring that the machinery of the public sector works efficiently and effectively. This is crucial because it can enhance—or undermine—a government’s ability to deliver results across all sectors. Poor public sector management leads to poor public sector performance: the suboptimal provision of public services, in terms of equity, access, and/or quality. This is particularly worrisome for the disadvantaged, as they rely disproportionately on public services.

    read more

    South African regulator faces storm of criticisms over mandatory firm rotation

    The South African regulator is edging closer to finalising a reform that started two years ago, but the prospect of the introduction of mandatory firm rotation has inflamed passions in the rainbow nation, Stephanie Wix reports.

    read more

    Uganda: a pearl in the rough

    Uganda’s nickname, the Pearl of Africa, was first coined by Winston Churchill decades ago, but it has endured and the country is still referred to as such today. Benefiting from 30 years of stability and an increasingly recognised accountancy profession, accounting firms are tackling the pervasive challenges and finding avenues for growth. Vincent Huck reports

    read more

    Djibouti’s reform heralds new hopes

    After securing a World Bank funding, Djibouti's accountancy profession is on the brink of a major reform that could take them to new heights. Vincent Huck reports

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.