Audit firm EisnerAmper hit by fines and costs in excess of €120,000

The Irish accounting regulator has imposed €122,000 of fines and costs on EisnerAmper Audit and two staff members in Dublin for breaching accounting standards in auditing clients’ books and “modifying” files ahead of authority inspections.

It is the first sanction imposed by the Irish Auditing & Accounting Supervisory Authority (Iaasa) since it assumed direct responsibility in 2016 for inspecting audits of so-called public entities such as banks, insurers, companies whose shares or debt are listed on a stock exchange.

EisnerAmper Audit, a mid-tier firm which has focused mainly on auditing special purpose vehicles that list debt on the Dublin market, has been fined €40,500 after Iaasa found issues with three sample audits it reviewed in 2018, the regulator said in a statement. It has also ordered the firm to pay €50,000 of costs relating its investigation.

Iaasa also fined Ronan Murphy, an audit partner with the firm, €22,500 for his role in the case, and levied a €9,000 penalty on an unnamed quality control reviewer of audit work. Mr Murphy's status as an affiliate of Chartered Accountants Ireland has been suspended for 12 months until the end of next July.

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"The conclusion of this investigation and the sanctions handed down send out a clear message that significant failures will be addressed robustly," said Iaasa chief executive Kevin Prendergast.

Iaasa told EisnerAmper Audit in early February 2018 it wanted to inspect the audit files of two special purpose vehicles (SPV): TCS Finance DAC, an entity used by Russian bank TCS to raise funds, and Strawinsky 1 PLC, a vehicle that investss in pools of corporate debt.

“In respect of the audit files for TCS Finance DAC and Strawinsky 1 PLC, the Authority found that individuals in the Firm had created, added or edited audit evidence in February 2018 after the formal notification of the inspection was issued and contrary to International Auditing Standards,” it said.

“Further, in respect of the audit file relating to Strawinsky 1 PLC the quality of the work performed, gave rise to concerns as to whether sufficient audit evidence was obtained by the Firm to support its audit opinion,” it added.

Reaction from EisnerAmper Audit

Iaasa also found issues with EisnerAmper’s audit work on an SPV, called Taurus CMBS (Pan-Europe) 2007-1, which owned debt linked to residential and commercial property across Europe that had been refinanced in bond markets.

“Iaasa’s relevant processes did not result in any recommendation that a set of audited financial statements should be restated, did not result in any recommendation that an audit opinion should be restated and did not record any adverse findings relating to the integrity of any individual,” EisnerAmper Audit (EAA) said in response to the sanctions. “Iassa, however, did decide to impose sanctions and EAA has accepted these.”

Issues with EisnerAmper Audit sample audits came to light when Iaasa published reports on auditors of public interest entities, with the firm receiving the lowest grades among the group for selected work.

A spokesman for EisnerAmper Audit told The Irish Times in July that it had pulled out of the Irish public interest entity market last year as it could no longer justify “the scale of resources required” for the audit of such entities.

Nevertheless, the firm said that it has implemented all of Iaasa’s recommendations.