Poor Supervision Can Have Grave Consequences
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The Public Company Accounting Oversight Board (PCAOB) in the U.S. has sanctioned Adeptus Partners and partner Howard Krant for serious audit failures, including poor supervision, review, and lack of quality control.
The violations relate to the audits of Blockchain of Things and Applied UV, where Krant failed to properly oversee engagement teams, did not review audit workpapers, and neglected to verify critical audit evidence, especially around deferred revenue. The firm was also penalised for not having effective quality control systems in place to prevent these lapses. Sanctions imposed include:
A $75,000 fine for the firm and $50,000 for Krant
Suspension of Krant from practice for one year
An order for the firm to appoint an independent consultant to improve its quality control processes.
🔍Why Supervision Is a Must
Supervision is the process of overseeing and guiding the work of others to ensure tasks are completed accurately, efficiently, and in line with required standards or objectives. It involves providing direction, reviewing work, offering feedback, and ensuring that team members have the support and resources they need. Effective supervision is essential in any organisation because it helps maintain quality, promotes accountability, supports staff development, and ensures that mistakes are caught early — all of which contribute to better overall performance and trust in the work being done.
💡 Why This Matters for Us
This case highlights how lapses in audit supervision and quality control can lead to severe regulatory action — even in smaller audits. With ISQM 1 now in effect locally, South African accounting and audit firms should ensure their engagement oversight, documentation, and quality systems are fully compliant.
Whether you’re auditing a JSE-listed entity or a smaller client, the basics of supervision, review, and quality assurance cannot be overlooked. The global trend is clear: regulators are raising the bar — and accountability is non-negotiable.
