According to the PCAOB’s disciplinary order, CohnReznick failed to timely disclose four reportable events on the PCAOB’s Form 3 regarding two disciplinary proceedings brought by the SEC against the firm and three of its partners. The SEC case concerned improper professional conduct by CohnReznick on engagements for two clients in 2017, which resulted in a $2 million settlement with the SEC in June 2022.
Under PCAOB Rule 2203, Special Reports, this event was supposed to be reported to the PCAOB within 30 days of the event’s occurrence. CohnReznick violated this rule, because it did not make the required disclosures about the SEC’s disciplinary proceedings involving the firm and its personnel until roughly five months after the deadline, the PCAOB said.
Failure in Compliance
“CohnReznick’s internal compliance and reporting systems failed to identify the initiation and conclusion of the Commission proceedings against CohnReznick and the firm’s partners as being reportable to the PCAOB on Form 3 on a timely basis,” the PCAOB’s disciplinary order stated. “As a result, CohnReznick inappropriately notified the PCAOB of the initiation and conclusion of relevant disciplinary proceedings after the deadline for doing so.”
Other audit firms should take note of this enforcement action, as the PCAOB has increased its vigilance over firms’ failures to disclose required events on Form 3, and within the required timeframe. “Registered firms must report qualifying events on Form 3 on a timely basis so that such information is available to investors and can be used as part of the Board’s oversight of those firms,” said Robert Rice, PCAOB Director of Enforcement and Investigations.
In addition to the civil penalty, the order further requires CohnReznick to comply with its PCAOB reporting policies and procedures, “including those pertaining to providing reasonable assurance that reportable events are reported on the applicable PCAOB form in a timely and complete manner.”
CohnReznick did not admit or deny the findings in consenting to the PCAOB’s order. 
Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.