PCAOB Fines Illinois Firm $50,000 Over Failures in 17 Broker-Dealer Audits
July 10, 2025
Michael Coglianese, CPA PC was censured and fined $50,000 July 10 for violating U.S. auditing rules and standards in connection with 17 audit and attestation engagements for SEC-registered brokers and dealers.
The Public Company Accounting Oversight Board censured Bloomingdale, IL-based Michael Coglianese, CPA PC and fined the accounting firm $50,000 on July 10 for violating U.S. auditing rules and standards in connection with 17 audit and attestation engagements for Securities and Exchange Commission-registered brokers and dealers.
Among the standards violated by Michael Coglianese was AS 1220, Engagement Quality Review, which the PCAOB says helps protect investors by increasing the likelihood auditors will identify significant audit deficiencies before issuing their audit or attestation report.
The PCAOB found that the accounting firm failed to choose an appropriately qualified individual to serve as the engagement quality reviewer for these engagements. Despite PCAOB standards stating that an engagement quality reviewer “must be a partner or another individual in an equivalent position,” the firm assigned a senior manager to serve as the engagement quality reviewer on the 17 engagements. While an engagement quality reviewer needs to be in a position to conduct an objective evaluation of various aspects of the engagement team’s work, at the time of the 17 engagements, the senior manager:
Reported to the individual serving as the engagement partner on the 17 engagements;
Had his compensation set by the engagement partner; and
Had his performance evaluated by the engagement partner.
“Engagement quality reviews protect investors by providing an important safeguard against erroneous or insufficiently supported audit opinions. When firms bypass these safeguards—by assigning individuals who do not meet the qualifications of the standard—they jeopardize investor trust and the integrity of our capital markets,” PCAOB Chair Erica Williams said in a statement on Thursday. “The PCAOB will hold auditors accountable when they violate our rules and standards in this area.”
In addition, the PCAOB found that Michael Coglianese’s system of quality control failed to provide the firm with reasonable assurance that engagement teams performed broker-dealer audit and attestations in accordance with applicable professional standards and regulatory requirements.
Without admitting or denying the findings, the accounting firm consented to being censured and fined $50,000. The firm must also perform certain remedial undertakings to improve its system of quality control.
“A statement in an audit report that the audit was performed in accordance with PCAOB standards is a representation to the investing public that should never be taken lightly, and serious consequences can follow when an auditor fails to meet that commitment,” said Robert Rice, director of the PCAOB’s Division of Enforcement and Investigations.
[CPA Practice Advisor]
