Write a summary of the case for the discussion page. Include the following:
Describe what the person or firm did that caused the PCAOB to initiate an enforcement action. Include in your description enough information that a person could understand what happened without reading the enforcement document. Describe the penalties imposed. Use proper grammar and write effectively. Do not cut and paste.
1666 K Street, N.W.
Washington, DC 20006
Telephone: (202) 207-9100
Facsimile: (202) 862-0757
www.pcaobus.org
ORDER INSTITUTING DISCIPLINARY
PROCEEDINGS, MAKING FINDINGS, AND
IMPOSING SANCTIONS
In the Matter of W.T. Uniack CPA, P.C. and
William T. Uniack, CPA,
Respondents.
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PCAOB Release No. 105-2017-028
May 24, 2017
By this Order, the Public Company Accounting Oversight Board (the “Board” or
“PCAOB”) is censuring W.T. Uniack CPA, P.C. (the “Firm”), revoking the Firm’s
registration;1 and censuring William T. Uniack (“Uniack”) and barring him from being an
associated person of a registered public accounting firm.2 The Board is imposing these
sanctions on the basis of its findings that the Firm and Uniack (collectively,
“Respondents”) violated PCAOB rules and standards in connection with four audits of
two issuer clients.
I.
The Board deems it necessary and appropriate, for the protection of investors
and to further the public interest in the preparation of informative, accurate, and
independent audit reports, that disciplinary proceedings be, and hereby are, instituted
pursuant to Section 105(c) of the Sarbanes-Oxley Act of 2002, as amended (the “Act”),
and PCAOB Rule 5200(a)(1) against Respondents.
II.
In anticipation of institution of these proceedings, and pursuant to PCAOB Rule
5205, Respondents have each submitted an Offer of Settlement (the “Offers”) that the
Board has determined to accept. Solely for purposes of these proceedings and any
other proceedings brought by or on behalf of the Board, or to which the Board is a party,
1
The Firm may reapply for registration after two (2) years from the date of
this Order.
2
Uniack may file a petition for Board consent to associate with a registered
public accounting firm after two (2) years from the date of this Order.
PCAOB Release No. 105-2017-028
May 24, 2017
Page 2
ORDER
and without admitting or denying the findings herein, except as to the Board’s
jurisdiction over them and the subject matter of these proceedings, which are admitted,
Respondents consent to entry of this Order Instituting Disciplinary Proceedings, Making
Findings and Imposing Sanctions (“Order”) as set forth below.3
III.
On the basis of this Order and Respondents’ Offers, the Board finds that:4
A.
Respondents
1.
W.T. Uniack CPA, P.C. is, and at all relevant times was, a corporation
organized under the laws of the state of Georgia, and headquartered in Woodstock,
Georgia.5 The Firm is registered with the Board pursuant to Section 102 of the Act and
PCAOB rules. The Firm is licensed to practice public accountancy by the state of
Georgia (License No. ACF 005300). At all relevant times, the Firm was the external
auditor for the issuers identified below.
2.
William T. Uniack, CPA, 64, of Alpharetta, Georgia, is a certified public
accountant licensed by the states of Georgia (License No. CPA025408) and Ohio
(License No. CPA.13634-OS). At all relevant times, Uniack was the sole partner of the
Firm, and served as the engagement partner on the audits discussed below. Uniack is
an associated person of a registered public accounting firm as that term is defined in
Section 2(a)(9) of the Act and PCAOB Rule 1001(p)(i).
3
The findings herein are made pursuant to Respondents’ Offers and are not
binding on any other persons or entities in this or any other proceeding.
4
The Board finds that Respondents’ conduct described in this Order meets
the conditions set out in Section 105(c)(5) of the Act, 15 U.S.C. § 7215(c)(5), which
provides that certain sanctions may be imposed in the event of (1) intentional or
knowing conduct, including reckless conduct, that results in a violation of the applicable
statutory, regulatory, or professional standard; or (2) repeated instances of negligent
conduct, each resulting in a violation of the applicable statutory, regulatory, or
professional standard.
5
The Firm filed a PCAOB Form 3 describing a change in its legal name
from W.T. Uniack & Co. CPAs P.C. to W.T. Uniack CPA, P.C., effective April 15, 2016.
PCAOB Release No. 105-2017-028
May 24, 2017
Page 3
ORDER
B.
Summary
3.
This matter concerns Respondents’ violations of PCAOB rules and
standards in connection with the Firm’s audits of the financial statements of Bravo
Multinational Incorporated (f/k/a GoldLand Holdings Co.) (“GoldLand”)6 and Silver Falcon
Mining, Inc. (“Silver Falcon”) for fiscal year ended December 31, 2013. As detailed
below, Respondents failed to obtain sufficient appropriate audit evidence and exercise
due professional care and professional skepticism in connection with each audit.
4.
This matter also concerns the Firm’s failure to comply with Auditing
Standard No. 7, Engagement Quality Review (“AS 7”). 7 In the Firm’s audits of
GoldLand’s and Silver Falcon’s financial statements for fiscal years ended December 31,
2012 and December 31, 2013, the Firm failed to obtain an engagement quality review of
the audits, even though an engagement quality review was required by AS 7.
5.
Additionally, Uniack took or omitted to take actions knowing, or recklessly
not knowing, that his acts and omissions would directly and substantially contribute to
the Firm’s violations of AS 7, in violation of PCAOB Rule 3502, Responsibility Not to
Knowingly or Recklessly Contribute to Violations.
C.
Respondents Violated PCAOB Rules and Auditing Standards
6.
In connection with the preparation or issuance of an audit report, PCAOB
rules require that a registered public accounting firm and its associated persons comply
with the Board’s auditing and related professional practice standards.8 An auditor may
6
On April 7, 2016, the company filed a Form 8-K reporting that GoldLand
Holdings Co. changed its corporate name to Bravo Multinational Incorporated on April 6,
2016.
7
All references to PCAOB standards are to the versions of those standards
in effect at the time of the relevant audits. As of December 31, 2016, the PCAOB
reorganized its auditing standards using a topical structure and a single, integrated
numbering system. See Reorganization of PCAOB Auditing Standards and Related
Amendments to PCAOB Standards and Rules, PCAOB Release No. 2015-002 (Mar.
31, 2015); see also PCAOB Auditing Standards Reorganized and Pre Reorganized
Numbering
(January
2016),
https://pcaobus.org/Standards/Auditing/Documents/
PrintableReferenceTable.pdf.
8
PCAOB Rules 3100, Compliance with Auditing and Related Professional
Standards, and 3200T, Interim Auditing Standards.
PCAOB Release No. 105-2017-028
May 24, 2017
Page 4
ORDER
express an unqualified opinion on an issuer’s financial statements only when the auditor
has formed such an opinion on the basis of an audit performed in accordance with
PCAOB standards. 9 Among other things, those standards require that an auditor
exercise due professional care and professional skepticism in the performance of the
audit and preparation of the report.10 Those standards require, among other things, that
an auditor plan and perform audit procedures to obtain sufficient appropriate audit
evidence to provide a reasonable basis for the opinion expressed in the auditor’s
report.11
7.
PCAOB auditing standards also require that an audit be properly planned,
that auditors identify and assess the risks of material misstatement at the financial
statement level and the assertion level, and that auditors design and perform audit
procedures in a manner that addresses the assessed risks of material misstatement for
each relevant assertion of each significant account and disclosure.12 The auditor should
develop and document an audit plan that includes a description of, among other things,
the planned risk assessment procedures and other planned audit procedures required to
be performed so that the engagement complies with PCAOB standards.13 Additionally,
the auditor must evaluate whether the financial statements are presented fairly, in all
material respects, in conformity with the applicable financial reporting framework.14
8.
PCAOB auditing standards state that observation of inventories is a
generally accepted auditing procedure.15 An auditor who issues an audit opinion without
9
See AU § 508.07, Reports on Audited Financial Statements.
10
See AU § 150.02, Generally Accepted Auditing Standards; AU § 230, Due
Professional Care in the Performance of Work.
11
See Auditing Standard No. 15, Audit Evidence (“AS 15”) ¶ 4.
12
See Auditing Standard No. 9, Audit Planning (“AS 9”), ¶ 4; Auditing
Standard No. 12, Identifying and Assessing Risks of Material Misstatement (“AS 12”),
¶ 59; and Auditing Standard No. 13, The Auditor’s Response to the Risks of Material
Misstatement (“AS 13”), ¶ 8.
13
See AS 9 ¶ 10.
14
See Auditing Standard No. 14, Evaluating Audit Results (“AS 14”), ¶ 30.
15
See AU § 331.01, Inventories.
PCAOB Release No. 105-2017-028
May 24, 2017
Page 5
ORDER
employing procedures to observe inventories has the burden of justifying the opinion
expressed.16 Moreover, in such circumstances, “tests of the accounting records alone
will not be sufficient for [the auditor] to become satisfied as to quantities; it will always be
necessary for the auditor to make, or observe, some physical counts of the inventory and
apply appropriate tests of intervening transactions.”17
9.
As described below, Respondents failed to comply with PCAOB rules and
standards in connection with the Firm’s audits of GoldLand’s and Silver Falcon’s 2013
financial statements.
Audit of GoldLand’s 2013 Financial Statements
10.
Bravo Multinational Incorporated (f/k/a GoldLand Holdings Co.) is a
Delaware corporation headquartered in Ontario, Canada. GoldLand’s public filings
disclose that it is engaged in the business of leasing mining claims. Its common stock is
registered under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange
Act”). At all relevant times, GoldLand was an issuer as that term is defined by Section
2(a)(7) of the Act and PCAOB Rule 1001(i)(iii).
11.
Uniack, as the engagement partner, authorized the Firm’s issuance of an
audit report, dated April 11, 2014, expressing an unqualified audit opinion, which
included a going concern explanatory paragraph, on GoldLand’s financial statements for
the year ended December 31, 2013. The audit report was included in GoldLand’s Form
10-K filed with the U.S. Securities and Exchange Commission (“Commission”) on April
15, 2014.
12.
In connection with the audit, Respondents failed to exercise due
professional care, including professional skepticism, and failed to plan and perform the
audit in accordance with PCAOB standards. During audit planning, Respondents failed
to develop and document an audit plan that included a description of the planned nature,
timing, and extent of risk assessment procedures. 18 Consistent with this planning
deficiency, Respondents failed to identify and assess the risks of material misstatement
at the financial statement and assertion levels.19 Respondents also failed to plan and
16
Id.
17
Id. at .12.
18
See AS 9 ¶ 10.
19
See AS 12 ¶ 59.
PCAOB Release No. 105-2017-028
May 24, 2017
Page 6
ORDER
perform any analytical procedures as risk assessment procedures.20 Respondents also
failed to identify any risks with respect to revenue recognition and management override
of controls, even though PCAOB standards provide that the auditor should presume that
there is a fraud risk involving improper revenue recognition and should include the risk of
management override of controls in his identification of fraud risks.21 Respondents also
failed to perform audit procedures in a manner that addressed the assessed risks of
material misstatement for each relevant assertion of each significant account and
disclosure.22
13.
GoldLand’s 2013 financial statements reported revenue related to its
leasing of mineral rights to Silver Falcon (the Lease Agreement). Under the Lease
Agreement, Silver Falcon agreed to pay GoldLand an annual leasing fee of $1 million.
This fee represented 100% of GoldLand’s revenues for 2013. Respondents failed to
evaluate whether GoldLand’s revenue recognition was in conformity with U.S. Generally
Accepted Accounting Principles (“GAAP”).23
14.
GoldLand’s 2013 financial statements also reported a mining properties
asset in its December 31, 2013 balance sheet that represented approximately $360,000,
or 90% of the company’s total assets. Other than obtaining management
representations, Respondents failed to perform any other audit procedures to determine
whether this material asset was properly valued. 24
15.
Respondents also failed to sufficiently evaluate GoldLand’s recording of
stock compensation expense and accrued compensation. GoldLand’s 2013 financial
statements disclosed that it had entered into an equipment purchase agreement with a
third-party seller, and that GoldLand agreed to issue common shares of its stock to
certain officers, directors, and consultants of the seller as bonuses under related
consulting or employment agreements. The financial statements also disclosed that this
issuance of stock occurred upon closing of the transaction in March 2014. GoldLand’s
financial statements reported that it had accrued the value of those shares to be issued
20
See AS 12 ¶¶ 46-48.
21
See AS 12 ¶¶ 68-69.
22
See AS 13 ¶ 8.
23
See AS 14 ¶ 30.
24
See AS 15 ¶¶ 4-6.
PCAOB Release No. 105-2017-028
May 24, 2017
Page 7
ORDER
as bonuses as a current liability in the year ending December 31, 2013, rather than in
March 2014, when the deal closed. As part of its accounting for this transaction,
GoldLand recorded stock compensation expense of approximately $6 million that
represented approximately 82% of the company’s total net loss for 2013, and recorded
accrued compensation of approximately $6 million that represented approximately 86%
of its total liabilities. During the audit, Respondents failed to evaluate whether it was
appropriate under U.S. GAAP for GoldLand to record the stock compensation expense
and accrued compensation in 2013, the year prior to the period in which the equipment
purchase transaction closed.25
Audit of Silver Falcon’s 2013 Financial Statements
16.
Silver Falcon Mining, Inc. is a Delaware corporation headquartered in
Bradenton, Florida. Silver Falcon’s public filings disclose that it specializes in gold and
silver properties and has acquired the rights to develop and operate certain mines in
Idaho. Its common stock is registered under Section 12(g) of the Exchange Act. At all
relevant times, Silver Falcon was an issuer as that term is defined by Section 2(a)(7) of
the Act and PCAOB Rule 1001(i)(iii).
17.
Uniack, as engagement partner, authorized the Firm’s issuance of an audit
report, dated April 11, 2014, expressing an unqualified audit opinion which included a
going concern explanatory paragraph, on Silver Falcon’s financial statements for the
year ended December 31, 2013. The audit report was included in Silver Falcon’s Form
10-K filed with the Commission on April 15, 2014.
18.
During audit planning, Respondents also failed to develop and document
an audit plan that included a description of the planned nature, timing, and extent of risk
assessment procedures.26 Consistent with this planning deficiency, Respondents failed
to identify and assess the risks of material misstatement at the financial statement and
assertion levels.27 Respondents also failed to properly plan and perform any analytical
procedures as risk assessment procedures.28 In addition, Respondents failed to perform
25
See AS 14 ¶ 30.
26
See AS 9 ¶ 10.
27
See AS 12 ¶ 59.
28
See AS 12 ¶¶ 46-48.
PCAOB Release No. 105-2017-028
May 24, 2017
Page 8
ORDER
audit procedures in a manner that addressed the assessed risks of material
misstatement for each relevant assertion of each significant account and disclosure.29
19.
Silver Falcon disclosed in its 2013 financial statements that mining
inventory represented over 40% of the company’s total assets for 2013. Other than
obtaining management representations and management’s schedule of inventory,
Respondents failed to perform any other audit procedures to test whether Silver Falcon’s
reported inventory existed and was recorded accurately in the 2013 financial
statements.30 Respondents did not conduct any observation procedures with respect to
Silver Falcon’s mining inventories.31
D.
The Firm Violated PCAOB Rules and Standards Relating to Engagement
Quality Reviews
20.
For audits of financial statements for years beginning on or after
December 15, 2009, AS 7 requires that an engagement quality review be performed on
audits and interim reviews conducted pursuant to PCAOB standards. 32 AS 7 also
provides that a firm may grant permission to a client to use the engagement report only
after an engagement quality reviewer provides concurring approval of issuance.33
21.
In connection with the audits of GoldLand’s and Silver Falcon’s financial
statements for 2012 and 2013, the Firm failed to comply with these requirements. For
each of these audit engagements, the Firm improperly permitted the issuance of its audit
reports which were included in GoldLand’s and Silver Falcon’s 2012 and 2013 Form 10K filings with the Commission, without obtaining an engagement quality review and
concurring approval of issuance as required by AS 7. As a result, the Firm violated AS 7.
29
See AS 13 ¶ 8.
30
See AS 15 ¶¶ 4-6.
31
See AU § 331.12.
32
See AS 7 ¶ 1.
33
See id. at ¶ 13.
PCAOB Release No. 105-2017-028
May 24, 2017
Page 9
ORDER
E.
Uniack Contributed to the Firm’s Violations of PCAOB Rules and Standards
Relating to Engagement Quality Reviews
22.
PCAOB Rule 3502 prohibits an associated person of a registered public
accounting firm from “tak[ing] or omit[ting] to take an action knowing, or recklessly not
knowing, that the act or omission would directly and substantially contribute to a violation
by that registered public accounting firm of the Act, the Rules of the Board, the
provisions of the securities laws relating to the preparation and issuance of audit reports
and the obligations and liabilities of accountants with respect thereto, including the rules
of the Commission issued under the Act, or professional standards.”
23.
Uniack, the sole owner of the Firm, was the engagement partner for the
audits conducted by the Firm and was responsible for them. Accordingly, he had overall
responsibility for ensuring that the Firm complied with PCAOB rules and standards.
Uniack knew, or was reckless in not knowing, that he was directly and substantially
contributing to the Firm’s violations of AS 7, described above. As a result, Uniack
violated PCAOB Rule 3502.
IV.
In view of the foregoing, and to protect the interests of investors and further the
public interest in the preparation of informative, accurate, and independent audit
reports, the Board determines it appropriate to impose the sanctions agreed to in
Respondents’ Offers. Accordingly, it is hereby ORDERED that:
A.
Pursuant to Section 105(c)(4)(E) of the Act and PCAOB Rule 5300(a)(5),
W.T. Uniack CPA, P.C., and William T. Uniack, CPA are hereby censured;
B.
Pursuant to Section 105(c)(4)(B) of the Act and PCAOB Rule 5300(a)(2),
William T. Uniack is barred from being an associated person of a
registered public accounting firm, as that term is defined in Section 2(a)(9)
of the Act and PCAOB Rule 1001(p)(i);34
34
As a consequence of the bar, the provisions of Section 105(c)(7)(B) of the
Act will apply with respect to Uniack. Section 105(c)(7)(B) provides: “It shall be unlawful
for any person that is suspended or barred from being associated with a registered
public accounting firm under this subsection willfully to become or remain associated
with any issuer, broker, or dealer in an accountancy or a financial management
capacity, and for any issuer, broker, or dealer that knew, or in the exercise of
PCAOB Release No. 105-2017-028
May 24, 2017
Page 10
ORDER
C.
After two (2) years from the date of this Order, William T. Uniack may file a
petition, pursuant to PCAOB Rule 5302(b), for Board consent to associate
with a registered public accounting firm;
D.
Pursuant to Section 105(c)(4)(A) of the Act and PCAOB Rule 5300(a)(1),
the registration of W.T. Uniack CPA, P.C. is revoked; and
E.
After two (2) years from the date of the Order, W.T. Uniack CPA, P.C. may
reapply for registration by filing an application pursuant to PCAOB Rule
2101.
ISSUED BY THE BOARD.
/s/ Phoebe W. Brown
_______________________________
Phoebe W. Brown
Secretary
May 24, 2017
reasonable care should have known, of such suspension or bar, to permit such an
association, without the consent of the Board or the Commission.”
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