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SEC fines PwC over alleged violation of auditor independence rules

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SEC fines PwC over alleged violation of auditor independence rules

The SEC penalized PricewaterhouseCoopers LLP for allegedly violating the regulator's auditor independence rules by performing prohibited non-audit services during an audit engagement.

The regulator also charged PwC partner Brandon Sprankle with causing the audit firm's independence violations.

In its cease-and-desist order, the SEC said that in 2014, PwC performed non-audit services for an audit client concerning governance risk and compliance software, which companies use to coordinate and to monitor controls over financial reporting, including employee access to critical financial functions.

The SEC said its rules prohibit independent auditors from designing and implementing systems such as governance risk and compliance software, where the software aggregates source data, or generates information significant to the clients' financial statements or other financial systems as a whole. It said that designing, implementing or operating systems affecting the financial statements may also place the accountant in a management role, or result in the accountant auditing his or her own work.

Both PwC and Sprankle agreed to settle the charges. PwC will pay more than $7.9 million in monetary relief, which includes disgorgement of about $3.8 million, plus prejudgment interest of $613,842 and a civil money penalty of $3.5 million, while Sprankle will pay a civil money penalty of $25,000. In addition, PwC agreed to be censured, and Sprankle agreed to be suspended from appearing or practicing before the SEC with a right to reapply for reinstatement after four years.

PwC and Sprankle consented to the order without admitting or denying the SEC's findings.