February 9, 2017

The Ernst & Young global network’s member firm in Indonesia has agreed to pay a $1 million penalty to the Public Company Accounting Oversight Board for audit failure, noncooperation, and violations of the board’s quality control standards.

Two audit partners at the firm, known as KAP Purwantono, Suherman & Surja, were also sanctioned for their roles in the audit failure in 2011 involving an Indonesian telecommunications company. The former professional practice director for the EY network’s Asia-Pacific region and a former EY Indonesia engagement partner were sanctioned for the audit failure, while the former engagement partner was also sanctioned for noncooperation with a PCAOB inspection and investigation.

The Ernst & Young global network’s member firm in Indonesia has agreed to pay a $1 million penalty to the Public Company Accounting Oversight Board for audit failure, noncooperation, and violations of the board’s quality control standards.

Two audit partners at the firm, known as KAP Purwantono, Suherman & Surja, were also sanctioned for their roles in the audit failure in 2011 involving an Indonesian telecommunications company. The former professional practice director for the EY network’s Asia-Pacific region and a former EY Indonesia engagement partner were sanctioned for the audit failure, while the former engagement partner was also sanctioned for noncooperation with a PCAOB inspection and investigation.

“Reliable audits are critical to providing investors a basis for confidence to participate in U.S. public capital markets,” said PCAOB chairman James R. Doty in a statement. “PCAOB standards and oversight are key protections for investors in U.S. securities. Wherever located, all audit firms that elect to register with the PCAOB must ensure that they and their personnel comply and cooperate with PCAOB inspections and investigations.”

The PCAOB gave “extraordinary cooperation credit” to a member of the 2011 audit engagement team who lent the board a great deal of help in investigating the misconduct.

The sanctioned auditors included Roy Iman Wirahardja, who was censured, fined $20,000, and barred for five years from association with a PCAOB-registered public accounting firm. He is no longer associated with EY Indonesia. James Randall Leali, a former professional practice director for the EY network's Asia-Pacific region, was censured, fined $10,000, and restricted for one year from acting as an engagement partner, an engagement review partner or professional practice director. Neither of them admitted or denied the allegations.

[Accounting Today]