The PCAOB said the firm and partner Kevin Olvera failed to properly evaluate three significant estimates that AAC used to value substantially all of its client-related revenue and accounts receivable, while another partner, Michael Musick, failed to exercise due professionalism in his engagement quality review of the 2017 audit.
Musick was found to have accepted the engagement team’s judgments related to the evaluation of the estimates instead of identifying audit work deficiencies.
The body noted that the firm and the partners ignored several red flags that called into question the reasonableness of the estimates. This occurred despite BDO, Olvera, and Musick encountering several red flags that raised doubts about the reasonableness of the estimates.
The board fined Olivera $35,000 and limited his ability to act in certain audit roles. Musick was fined $25,000. Both individuals are required to complete additional Continuing Professional Education (CPE) work.