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- Title
Why SPACs Fail to Meet Audit Quality Control Standards.
- Authors
Mintz, Steven M.
- Abstract
This article explores the concerns and challenges surrounding special purpose acquisition companies (SPACs) and their impact on audit quality control standards. It discusses issues such as reclassifying equity warrants, error corrections in financial statements, and compliance with SEC and PCAOB regulations. The dominant players in the SPAC market, Marcum LLP and WithumSmith+Brown PC, are mentioned, along with the SEC's legal settlement with Marcum for audit quality control deficiencies. The article also addresses accounting for SPAC acquisitions, restatements of financial statements, and the implications for corporate governance. The SEC and PCAOB have taken regulatory actions against Marcum, including fines and the requirement for functional changes to its quality control structure. The article emphasizes the importance of Engagement Quality Reviews (EQR) in ensuring accurate and supported audit opinions, citing cases where accounting firms were sanctioned by the SEC for deficiencies in their handling of SPAC transactions. It also discusses audit independence issues and the role of audit committees in SPAC mergers. The article concludes by mentioning potential future changes in regulations and the need for auditors to prioritize audit quality.
- Subjects
QUALITY control standards; AUDITING; AUDITING standards; SPECIAL purpose acquisition companies; ACCOUNTING firms; REDEMPTION (Law); ACCOUNTING fraud; CAREER development; INTERNAL auditing
- Publication
CPA Journal, 2023, Vol 93, Issue 11/12, p36
- ISSN
0732-8435
- Publication type
Article