PCAOB Fines L&L CPAs and Three Auditors Over Quality Control Gaps
The Public Company Accounting Oversight Board has imposed $150,000 in combined penalties on Plantation, FL-based L&L CPAs and three of its auditors for failures in quality control, audit performance, and regulatory filings. All parties were censured.
Penalties break down as follows:
- L&L CPAs and president Weixuan Tracy Luo: joint fine of $75,000
- Engagement partner Andy Chow: $50,000 civil money penalty
- Engagement quality reviewer Robert Kinzer: $25,000
Chow has been barred from association with a registered public accounting firm, with the right to petition for termination of the bar after one year and 50 hours of continuing professional education. Kinzer must complete 50 hours of CPE and faces activity restrictions for one year.
Basis for the Sanctions
The PCAOB's order points to inadequate quality control policies around critical audit matters (CAMs) and repeated late filings of Form AP, which discloses audit participants. Specific findings:
- L&L did not establish quality control procedures sufficient to comply with PCAOB CAM requirements, and filed two Form APs late.
- Luo contributed directly and substantially to the firm's quality control deficiencies.
- Chow failed to obtain sufficient appropriate audit evidence for an intangible asset representing more than 50% of Sugarmade Inc.'s total assets (fiscal year ended June 30, 2021), and inaccurately described how the engagement team addressed a CAM in the audit report.
- Kinzer did not perform his engagement quality review with due professional care.
PCAOB Chair Erica Williams underscored that CAMs exist to inform investors about significant audit matters and how they were addressed — a purpose undermined when disclosures are inaccurate.
Implications
Firms auditing smaller SEC registrants should treat CAM documentation and Form AP timeliness as quality control priorities, not administrative afterthoughts. Engagement quality reviewers in particular should expect continued PCAOB focus on whether their reviews meet professional care standards.