The Public Company Accounting Oversight Board (PCAOB) has recently imposed fines totaling more than $2 million on accounting firm BDO USA and two of its partners for their violations of audit rules during the 2017 audit of AAC Holdings. AAC Holdings is a substance-abuse treatment company known as American Addiction Centers.
According to the PCAOB, BDO and partner Kevin Olvera failed to properly assess three significant estimates that AAC used to evaluate the value of its client-related revenue and accounts receivable. Additionally, partner Michael Musick was found to have not exercised due professional care when conducting a quality review of the audit.
As a result of these violations, Tennessee-based AAC was delisted from the New York Stock Exchange in 2019 and eventually filed for bankruptcy protection in 2020.
While BDO, Olvera, and Musick did not admit or deny the PCAOB’s findings, BDO has agreed to pay a fine of $2 million. Olvera will also be required to pay $35,000 and restrict his involvement in audits for one year, while Musick has been ordered to pay $25,000.
Despite this disciplinary action by the PCAOB, a spokeswoman from BDO has emphasized the firm’s commitment to upholding professional standards in conducting audits. The spokeswoman stated, “At BDO, we are dedicated to maintaining the highest standards of excellence throughout our business and fully support the PCAOB’s mission of safeguarding investors and promoting the public interest.”