In re MARCUM LLP

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 97773 / June 21, 2023 
 
ACCOUNTING AND AUDITING ENFORCEMENT  
Release No. 4423 / June 21, 2023 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-21500 
 
 
In the Matter of 
MARCUM LLP 
Respondent. 
 
ORDER INSTITUTING PUBLIC 
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS, PURSUANT TO 
SECTIONS 4C AND 21C OF THE 
SECURITIES EXCHANGE ACT OF 1934, 
AND RULE 102(e) OF THE 
COMMISSION’S RULES OF PRACTICE, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER  
 
I. 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
instituted against Marcum LLP (“Respondent” or “Marcum”) pursuant to Sections 4C
1
 and 21C of 
the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 102(e)(1)(ii) of the Commission’s 
Rules of Practice.
 2
   
                                                 
1
 Section 4C provides, in relevant part, that:   
The  Commission  may  censure  any  person,  or  deny,  temporarily  or  permanently,  to  any  person  the  privilege  of 
appearing or practicing before the Commission in any way, if that person is found ... (1) not to possess the requisite 
qualifications to represent others; (2) to be lacking in character or integrity, or to have engaged in unethical or improper 
professional conduct; or (3) to have willfully violated, or willfully aided and abetted the violation of, any provision of 
the securities laws or the rules and regulations issued thereunder. 
2
 Rule 102(e)(1)(ii) provides, in pertinent part, that:  
The Commission may censure a person or deny, temporarily or permanently, the privilege of 
appearing or practicing before it ... to any person who is found ... to have engaged in unethical 
or improper professional conduct.  

 
 
2 
II. 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Public 
Administrative and Cease-and-Desist Proceedings Pursuant to Sections 4C and 21C of the 
Securities Exchange Act of 1934 and Rule 102(e) of the Commission’s Rules of Practice, Making 
Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth 
below. 
III. 
 On the basis of this Order and Respondent’s Offer, the Commission finds
3
 that  
A. SUMMARY 
1. This matter involves systemic quality control failures and violations of audit 
standards by Marcum from at least 2020.  The violations of Public Company Accounting Oversight 
Board (“PCAOB”) professional standards identified in this Order were primarily in connection with 
audit work for special purpose acquisition companies (“SPACs”).  However, the nature of these 
professional standard violations—including their volume and range—reflects deficiencies relevant 
to and impacting Marcum’s entire public company audit practice.  
2. Marcum’s quality control and audit standard failures permeated most stages of 
engagement work—from client acceptance to risk assessments, audit committee communications, 
audit documentation, assembly and retention of audit documentation, engagement quality reviews, 
technical consultations, due professional care, and engagement partner supervision and review.  At 
nearly every stage, Marcum lacked sufficient policies and procedures to provide reasonable 
assurance that engagements were conducted in accordance with professional standards.  Further, 
Marcum did not sufficiently monitor the effectiveness of its policies and procedures and did not 
adequately communicate those policies and procedures to engagement teams.  In sum, Marcum’s 
quality controls system failed and, as a result, certain audits were not conducted in compliance with 
PCAOB audit standards.
4
  
                                                 
3
 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding 
on any other person or entity in this or any other proceeding. 
4
 Throughout this Order, unless otherwise specified, references to “audit standards” refer to audit 
standards promulgated by the PCAOB.  

 
 
3 
3. Investors rely on audit firms to serve a critical function regarding financial reporting.  
Quality controls and audit standards are necessary to maintaining this essential gatekeeping role.  As 
described, Marcum repeatedly failed to sufficiently establish key foundational policies and 
procedures, leading to multiple violations of applicable professional standards and corresponding 
misstatements to investors that Marcum audits were conducted in compliance with those standards.  
B. RESPONDENT 
4. Marcum, a New York limited liability partnership headquartered in New York, New 
York, is a public accounting firm in the United States.  As of mid-2022, Marcum had over 370 
partners and 2,300 employees, with offices in more than 30 cities.  Marcum has been registered with 
the PCAOB since October 2003.  
C. OTHER RELEVANT ENTITIY—MARCUM ASIA CPAs LLP 
5. Marcum Asia CPAs LLP (“Marcum Asia”), a New York limited liability partnership 
headquartered in New York, NY, is a public accounting firm in the United States.  Marcum Asia has 
137 accounting personnel, with offices also in China and Singapore.  Marcum Asia has been 
registered with the PCAOB since 2011, including, until September 2022, under the name Marcum 
Bernstein & Pinchuk LLP.  
6. Marcum holds a 50 percent interest in Marcum Asia, and all partners of Marcum 
have a partnership interest in Marcum Asia.  The majority of Marcum Asia partners also hold a 
partnership interest in Marcum.  Marcum has referred prospective clients, including SPAC clients, 
to the entity now known as Marcum Asia.  
7. Marcum Asia relies substantially upon Marcum for its quality control system.  
Specifically, Marcum Asia’s quality control system relies upon many of Marcum’s quality control 
policies, procedures, and monitoring systems.  Many of Marcum Asia’s quality control functions—
such as client acceptance, internal inspections, PCAOB reporting and inspections, engagement 
quality reviews, and audit documentation and binder monitoring—are managed in parallel with 
Marcum’s quality control functions, by the same personnel, partners, and management.   
D.  FACTS 
MARCUM’S SPAC PRACTICE 
8. In 2020 and 2021, over 860 SPACs completed initial public offerings (“IPOs”) in 
the United States.  Over 400 of these SPAC IPOs were audited by Marcum.  In 2019, Marcum had 
served as the auditor for only 185 public company issuers; by 2022, Marcum was responsible for 
auditing over three times that number—a total of 575 issuers, the majority of which were SPACs.  
This vaulted Marcum to the fifth largest public company auditing firm, as measured by number of 
clients.  

 
 
4 
9. The strain of this exponential growth in Marcum’s public company practice exposed 
substantial, widespread, and pre-existing deficiencies in the firm’s underlying quality control 
policies, procedures, and monitoring.  In the period immediately preceding the SPAC market’s 
explosion, Marcum’s annual inspections by the PCAOB had revealed an increasing number of 
deficiencies.  Marcum was also subject to consecutive PCAOB enforcement orders—in 2019 and 
2020—related to quality control failures concerning independence and client acceptance.  
10. Starting at least in 2018 and continuing through 2021, Marcum’s own inspections 
also repeatedly revealed deficiencies, but Marcum failed to adequately remediate them.  Marcum’s 
2018 internal inspection, for example, found that 8 out of 13 public company audits inspected were 
missing documentation.  The following year, in 2019, Marcum’s internal inspection report noted: 
“there are still too many documentation misses,” including “three engagements [which] included 
work papers that were signed off after the report was issued.”  In 2020, Marcum’s internal 
inspection identified numerous documentation deficiencies, and concluded that in many instances, 
these deficiencies were caused by engagement partners, managers, and EQRs not spending enough 
time on the engagements.
5
  Despite repeated inspection findings, Marcum failed to take sufficient 
remediative action.  
CLIENT ACCEPTANCE AND STAFFING CAPACITY 
11. Marcum’s client acceptance process lacked sufficient quality control policies, 
procedures, and monitoring related to evaluating personnel capacity, as required by PCAOB Quality 
Control (“QC”) 20.15(a), as well as QC 20.03 and QC 20.20.  
12. Marcum’s firm policy required that any new public company client must be 
accepted by its Client Acceptance Committee.  Yet, Marcum’s client acceptance process, as 
conducted by its Client Acceptance Committee, did not evaluate the firm’s personnel capacity in 
connection with accepting new SPAC clients.  Additionally, the engagement partners responsible 
for submitting prospective new SPAC clients to the Client Acceptance Committee were also not, at 
the time of client acceptance, adequately evaluating capacity.  Engagement partners submitted 
SPAC clients for acceptance on the assumption that capacity and staffing could be managed at a 
later date, and that they would not remain obligated to serve as engagement partner.  Marcum had 
no other policies or procedures, at the time of client acceptance, that provided “reasonable 
assurance” that the firm would have sufficient personnel capacity to take on a new SPAC client or 
clients. 
13. Rather, to the extent that Marcum evaluated staffing capacity, it did so in connection 
with the logistics and scheduling of work to which it had already committed.  Throughout 2020 and 
                                                 
5
 Throughout this Order, “EQR” will be used to refer to both: (1) the audit partner (the 
“engagement quality reviewer”) providing concurring approval of an audit report, and (2) the 
review procedures (an “engagement quality review”) performed by such partner in connection 
with providing his or her concurring approval.  

 
 
5 
2021, Marcum continued to assume it could manage based upon some combination of triaging 
staffing and deadlines.  This assumption became more problematic, and ultimately untenable, given 
the ever-escalating volume of SPAC clients accepted by the firm.  
14. Marcum’s SPAC client acceptances increased dramatically.  In 2020, Marcum 
accepted 178 new SPAC clients.  In 2021, it accepted 633 new SPAC clients, including 159 
accepted in March 2021 alone—a substantial increase from the 8 new SPAC clients accepted just 
one year prior, in March 2020.  Each SPAC client also typically generated multiple audit 
engagements—first an IPO engagement, then an engagement in connection with periodic reporting 
obligations as a public company.  In the first three months of 2021 alone, Marcum sent out 345 new 
SPAC engagement letters.  
15. The impact these new clients and engagements had on Marcum’s SPAC client roster 
was significant.  Marcum went from a total of 113 SPAC clients in September 2020 to a total of 882 
SPAC clients in June 2021.  The figures of 113 and 882 total SPAC clients include clients to whom 
Marcum had only sent out a draft engagement letter—yet such prospective clients were never 
subsequently turned away.  Marcum also never turned away its SPAC IPO clients who, upon 
becoming effective public companies, needed additional audit services in connection with their 
periodic reporting obligations.  Notably, however, in connection with SPAC clients, fulfilling 
periodic reporting obligations—including audits and reviews in connection with Form 10-K and 
Form 10-Q filings—typically required substantially more hours, and unlike IPO engagement work, 
was subject to specific reporting deadlines, both factors which further exacerbated strains in 
Marcum’s capacity at all personnel levels.  
16. As a consequence of the exponential escalation in its SPAC clients and 
engagements, Marcum faced difficulty in staffing engagements, difficulty and delays in completing 
work within requisite deadlines, and non-compliance with numerous PCAOB audit standards.  
These difficulties were raised to firm management by Marcum personnel.  At the beginning of 
February 2021, for example, a national office partner alerted firm leadership that managers in the 
SPAC practice were “working 90+ hour weeks,” noting that “I think many, many of them are at 
their breaking point and just simply need more help and more resources.”  Nonetheless, over the 
course of February 2021, Marcum accepted a record 114 new SPAC clients.  At the beginning of 
March 2021, the partner again advised firm leadership, noting the “disconnect between how the 
practice is running and what we are putting in place to make sure we’re in compliance with 
professional standards” and highlighting concerns that Marcum was “setting ourselves up to fail at 
our own policies.”  Nonetheless, Marcum accepted another 159 new SPAC clients in March 2021.  
17. During 2020 and 2021, Marcum repeatedly had difficulty obtaining staffing at all 
levels.  Additionally, as staffing became more constrained, managers and engagement partners were 
assigned later in the engagement process, rather than immediately upon receipt of a client-signed 
engagement letter.  Staffing of engagement quality reviews (“EQRs”) became especially difficult.  
In particular, in early 2021, a substantial portion (20%) of engagement quality reviews were 
reallocated—by firm leadership—to public company audit partners who did not typically perform 
engagement quality reviews.  

 
 
6 
18. One area in which delays and the failure to satisfy audit standards was particularly 
acute was in the timely completion, assembly, and retention of audit documentation.  Between 
October 2020 and early June 2021, the number of work paper binders that were not finalized and 
assembled for retention within the PCAOB-required 45-day period (measured from report release 
date) increased from 23 to 687.  Marcum personnel repeatedly attributed these delinquencies, and 
the growth in delinquencies, to the overall volume of engagements and lack of personnel capacity.  
In particular, memos drafted by manager and staff-level personnel in connection with delinquent 
binder archiving repeatedly attributed the delinquencies to “time constraints associated with the 
volume of SPACs”; such language was used in connection with engagements dating back to July 
2020, and continued to be cited in memos through August 2021.  
19. The difficulties in staffing and delays in completing work within requisite deadlines, 
as well as non-compliance with PCAOB audit standards, reflect that Marcum could not have 
reasonably expected to complete all accepted SPAC engagements in accordance with professional 
standards.  
CLIENT ACCEPTANCE AND MANAGEMENT INTEGRITY 
20. Marcum’s client acceptance process lacked sufficient quality control policies, 
procedures, and monitoring to evaluate the management integrity of prospective clients, including 
insufficient documentation and communication of such policies and procedures, as required by QC 
20.14, as well as QC 20.03, QC 20.20, QC 20.23, and QC 20.24. 
21. Marcum’s firm policy provided that, prior to the acceptance of any new public 
company client, Marcum must obtain and review background reports on any key personnel, 
including the company’s CEO, CFO, and Audit Committee Chair.  This policy required that the 
background reports were included among the materials sent to the Client Acceptance Committee for 
its review.  The Client Acceptance Committee reviewed such reports in connection with its 
acceptance decisions. 
22. For prospective SPAC clients, however, Marcum deviated from its policy and did 
not require receipt and review of background reports prior to client acceptance.  Instead, Marcum 
required only that relevant client personnel submit a form authorizing a background check, and the 
form relied upon client personnel to self-disclose relevant facts.  Marcum personnel relied on that 
form completed by their clients and also conducted cursory internet searches related to the relevant 
client personnel.  The completed background reports were required to be received and reviewed 
prior to the effective date of the SPAC’s IPO. 
23. Marcum’s SPAC-specific background report “policy” was not memorialized in any 
relevant policy document or form; internal communications reflect that the lack of any written 
policy may have resulted in this policy and corresponding procedures not being sufficiently 
understood and consistently applied across the SPAC practice.  

 
 
7 
24. Marcum’s SPAC-specific “policy” also lacked guidance regarding how requisite 
internet searches were to be conducted.  As a result, searches conducted relied upon protocols that 
may have been insufficient to provide relevant information.  
25. Marcum relied solely on engagement teams for compliance with the requirement 
that background reports were received and reviewed prior to IPO effectiveness.  This was a contrast 
to the firm-wide procedure, in which the Client Acceptance Committee would both ensure reports 
were received prior to client acceptance, and substantively review the reports.  
26. Marcum also had insufficient monitoring of compliance with the SPAC-specific 
“policy.”  As early as August 2020 and through the fall of 2021, multiple SPAC managers and both 
Client Acceptance Committee co-chairs voiced the need for additional resources and processes to 
monitor the timely receipt of background reports.  Sufficient additional resources and processes, 
however, were not provided.  
27. The weakness of Marcum’s process was reflected in a one-time monitoring exercise, 
conducted in July 2021, which revealed that a substantial portion of SPAC work paper binders did 
not include documentation of one or more required background reports.  This monitoring exercise 
found that, among SPAC clients that had completed the IPO process, over one-third were missing 
reports required under Marcum’s SPAC-specific policy.   
AUDIT DOCUMENTATION 
28. In documenting engagement work, Marcum lacked sufficient policies, procedures, 
and monitoring to provide reasonable assurance that audit documentation reflected when procedures 
were performed, the date work was completed, and the date of relevant reviews, as well as reflected 
that audit procedures were completed and sufficient evidence obtained prior to the release of the 
respective audit report, as required by QC 20.03, QC 20.17, and QC 20.20.  In particular, Marcum 
lacked sufficient policies, procedures, and monitoring related to work paper sign offs, including the 
timing and dating thereof, as well as related to the timely assembly and retention of audit 
documentation, resulting in numerous engagements in violation of the underlying audit standard, 
AS 1215, within the SPAC practice and throughout the firm.  Marcum also lacked sufficient 
policies, procedures, and monitoring related to the assembly and retention of audit documentation, 
including in connection with policies related to email retention, as well as sufficient policies, 
procedures, and monitoring related to audit documentation added subsequent to AS 1215.15’s 45-
day documentation completion date (as specified in AS 1215.16), as required by QC 20.03, QC 
20.17, QC 20.20, QC 20.23, and QC 20.24.  
Work Paper Sign Offs  
29. Marcum lacked sufficient policies, procedures, and monitoring related to work paper 
sign offs, including the timing thereof, resulting in widespread violations of the underlying audit 
standard, AS 1215, based on Marcum engagement partners, EQRs, managers, and staff-level 

 
 
8 
personnel performing work paper sign offs only subsequent to the release of audit reports and other 
issuances.  
30. Prior to the release of an audit report, Marcum’s firm policy required engagement 
managers, engagement partners, and EQRs to sign off on a “routing slip” work paper, which 
represented that all requisite reviews had been performed.  EQRs were also required, prior to the 
release of an audit report, to sign off on an “EQR memo” work paper, which provided information 
regarding the EQR’s review procedures.  Marcum policy also required sign off on certain other 
work papers, but did not require that such work paper sign offs be conducted prior to the report 
release date; Marcum required only that these sign offs were done prior to the documentation 
completion date prescribed by AS 1215.15 (45 days from report release date).   
31. Marcum’s written policies failed to address explicit requirements of AS 1215.06(b), 
including that audit documentation reflect “the date such work was completed” and “the date of 
such review.”  
32. In early 2021, Marcum conducted post-issuance inspections of its SPAC IPO work 
paper binders (the “Post-Issuance IPO Review”).  These inspections, conducted between one and 
three days after the relevant audit report was released, revealed that approximately three-fourths of 
work paper binders contained one or more work papers lacking both “preparer” and “reviewer” sign 
offs.  These same inspections revealed that many work papers required to be signed off on by 
engagement partners and EQRs—required per Marcum’s own policy—were not yet signed off on; 
depending upon the work paper, across these inspections, the percentage of missing sign offs 
identified ranged from at least 10% to as high as 50%.  
33. Also in early 2021, Marcum conducted a post-issuance inspection of 25 SPAC IPO 
audits whose work papers binders had already been archived.  Of these 25 binders, only 8 were in 
compliance with Marcum’s documentation and sign off policies.  
34. Additionally, a sampling review of 28 SPAC audit binders conducted by SEC staff 
in the Division of Enforcement (the “SEC Review”) revealed that over 25% of Marcum-required 
engagement partner sign offs were either conducted post-issuance or entirely missing.  Among 
Marcum-required EQR sign offs, approximately one-third were either conducted post-issuance or 
entirely missing.  The SEC Review revealed post-issuance and/or missing sign offs in every one of 
28 SPAC audit binders reviewed.  The SEC Review also revealed that many post-issuance sign offs 
were conducted only in connection with binder assembly and retention (or “archiving”) procedures, 
frequently conducted at or around 45 days post-issuance, if not later.  Indeed, among the audit 
binders reviewed, half were archived outside of AS 1215.15’s 45-day “documentation completion 
date,” and contained sign offs by the engagement partners and EQRs that were executed post-45 
days.  The SEC Review, and in particular the time-stamps associated with the sign offs, also 
revealed that sign offs were frequently conducted in quick succession.  Similar findings were 
observed outside the SPAC practice.  
“Routing Slips” 

 
 
9 
35. Marcum lacked sufficient policies, procedures, and monitoring related to sign offs 
on its “routing slip” work paper, including the timing and dating thereof.  Marcum engagement 
partners, EQRs, and managers engaged in widespread violations of the underlying audit standard, 
AS 1215, including signing routing slips only subsequent to the release of audit reports and other 
issuances, often also signing routing slips using only manually input date entries.  
36. Although Marcum purported to require that its “routing slips” were signed pre-
issuance, at Marcum there was a long-standing and known practice of post-issuance routing slip 
sign offs.  This included routing slips signed weeks or even 45 or more days post-issuance.  In 2020 
and through mid-2021, within the SPAC practice, up to 50% of routing slips were not fully signed 
prior to issuance.   
37. Marcum’s routing slip sign offs were also frequently conducted manually, and 
signed with dates that did not reflect the actual date on which Marcum personnel conducted their 
sign offs.  While firm management was aware that routing slips were often signed post-issuance, 
firm policy nonetheless explicitly allowed the use of manual signatures—with only manually input 
date entries—that often had the effect of obscuring the actual date upon which routing slips were 
signed by Marcum personnel.   
38. A sampling review of SPAC routing slips conducted by SEC staff in the Division of 
Enforcement reflected this practice in connection with approximately 20% to 50% of routing slips.  
In these instances, the manually input date on the routing slip’s signature line corresponded to the 
date the audit report was released, and pre-dated the date upon which Marcum personnel actually 
signed the routing slip.   
39. By contrast, some Marcum personnel, although signing only after the audit report’s 
release, signed with an electronic, time-stamped signature.  Marcum policy at the time, however, did 
not require personnel use an electronic time stamp signature.  
40. In 2021, Marcum implemented an electronic routing slip system.  While this system 
removed the ability to manually input sign off dates, Marcum continued to lack sufficient policies, 
procedures, and monitoring related to routing slips.  Marcum did not amend its formal policy 
documents regarding the timing and documentation of routing slip sign offs; while Marcum 
management sent an email announcing a policy revision, its 2017 policy on “routing slips” was not 
revised, and remained posted on Marcum’s intranet.  Additionally, the timeliness of sign offs 
remained not subject to sufficient monitoring protocols.  
Audit Documentation Assembly and Retention (Archiving) 
41. Marcum lacked sufficient policies, procedures, and monitoring related to the 
assembly and retention (also referred to as “archiving”) of audit documentation, including its 
routing slip policies and procedures, its email retention policies and procedures, and policies and 
procedures related to assembly and retention of audit documentation in connection with departed 
personnel.  

 
 
10 
42. Marcum’s procedures for ensuring compliance with assembly and retention 
requirements—including that audit documentation was identified for retention, archived, and 
archived timely—were based on its routing slips.  Marcum logged each routing slip, and used such 
logs to monitor the timely assembly and retention of work paper binders.  Therefore, to the extent 
that a routing slip was not yet generated, Marcum was not yet monitoring whether the related audit 
documentation was being assembled and retained—meaning Marcum could not have reasonable 
assurance that audit documentation was being archived for retention, on a timely basis or at all.  No 
routing slip was generated, however, until engagement team personnel requested a routing slip.  
43. Within Marcum’s SPAC practice in 2020 and 2021, in many instances, not only was 
a routing slip not fully signed off prior to issuance—at times, no routing slip record had been 
generated at all.  Instead, the routing slip record was not generated until weeks or months after the 
release of the audit report or other issuance.  Internal communications in January through August of 
2021—including communications to Marcum’s firm management—reflect that routing slip records 
were missing for issuances dating back as many as nine months prior.  These routing slips were 
missing because engagement team personnel failed to request a routing slip.  
44. Marcum’s procedures for ensuring compliance with assembly and retention 
requirements also failed to monitor the assembly and retention of documentation created in 
connection with engagements for which no report or other issuance was ultimately released.  
Marcum’s procedures were based on monitoring routing slips, yet routing slips were typically not 
generated prior to the day a report or issuance was to be released.   
45. Within Marcum’s SPAC practice, engagement teams often performed work in 
connection with reports or other issuances that were not ultimately released, including when clients 
chose to withdraw a registration statement.  The fact that not all SPAC clients would complete the 
IPO process was a known and foreseeable fact in the industry, yet Marcum, despite its substantial 
volume of SPAC clients, failed to adopt policies, procedures, and monitoring sufficient to provide 
reasonable assurance that such audit documentation was assembled and retained in a timely fashion, 
or at all.  Marcum did not archive numerous work paper binders, despite the work papers reflecting 
that months had passed since any procedures and work had been performed on the engagement; 
among such binders, many lacked any indication that a routing slip had ever been generated.  
46. Email “Auto Delete” Policy.  Marcum’s policies and procedures were additionally 
insufficient to provide reasonable assurance that audit documentation for SPAC engagements was 
appropriately and timely retained and archived due to its email “auto delete” policy.  At Marcum, 
audit documentation was frequently not saved into the engagement binder software until archiving 
procedures were conducted.  In the interim, documentation was frequently maintained only within 
engagement team members’ email communications.  In 2021, Marcum did not archive a notable 
number of work paper binders—SPAC binders in particular—until six months or more following 
the date of the report or other issuance.  Notwithstanding such facts, in March 2021, Marcum 

 
 
11 
implemented a six-month “auto delete” policy on email communications for the SPAC practice.
6
  
Given the facts and circumstances, Marcum’s implementation of a six-month email “auto delete” 
policy failed to provide reasonable assurance that audit documentation would be appropriately and 
timely archived for retention. 
47. Assembly and Retention of Audit Documentation in Connection with Departed 
Personnel.  At Marcum, numerous work paper binders were not archived prior to the departure of 
relevant engagement team personnel.  Not infrequently, such binders were not archived timely, but 
lingered on “delinquency lists” for several months.  Internal communications also reflect instances 
in which, upon initiation of archiving procedures, there were difficulties in locating audit 
documentation due to the personnel’s departure.  
Timeliness of Audit Documentation Assembly and Retention (Archiving)  
48. Marcum also lacked sufficient policies, procedures, and monitoring related to the 
timely assembly and retention of audit documentation, resulting in widespread violation of the 
underlying audit standard, AS 1215, particularly within the SPAC practice.  
49. Particularly within the SPAC practice, Marcum frequently did not assemble a 
complete and final set of audit documentation for retention within the 45 days after the report 
release date, as required by AS 1215.15.  As of early June 2021, Marcum had at least 687 SPAC 
work paper binders that were past the 45 day documentation completion date, and yet not archived.  
In total, between late 2020 and over 2021, at least 1,800 of Marcum’s SPAC work paper binders 
were delinquently archived, representing as much as 50% of SPAC work paper binders within this 
time period.  
Audit Documentation Added Following the 45-Day Documentation Completion Date  
50. Marcum lacked sufficient policies, procedures, and monitoring related to compliance 
with AS 1215.16, as well as sufficient documentation and communication of such policies.  AS 
1215.16 requires that no audit documentation is deleted or discarded after the “documentation 
completion date,” set at 45 day following the audit report release date.  Yet, Marcum failed to 
sufficiently document or communicate this requirement in a manner that would have provided 
reasonable assurance that the policy would be understood and complied with.  For example, the 
relevant section of one policy manual failed to state this requirement at all.   
51. AS 1215.16 also requires that the addition of any documentation subsequent to the 
45-day documentation completion date is explicitly documented, including documenting “the date 
the information was added, the name of the person who prepared the additional documentation, and 
the reason for adding it.”  Yet, Marcum did not sufficiently document or communicate this 
requirement in a manner that would have provided reasonable assurance that the policy would be 
                                                 
6
 Approximately two months later, following the initiation of Staff’s investigation, this policy 
was suspended.   

 
 
12 
understood and complied with.  For example, one policy manual limited this requirement to those 
alterations that were “substantive,” which limitation is not contained in the audit standard, and not 
defined within Marcum’s policies.  Another policy manual did state a memorandum was required to 
document any additions made to audit documentation, but the policy was unclear as to its 
application.  
52. Marcum’s internal email communications reflect that Marcum did require a 
memorandum in connection with all delinquently archived binders, and that Marcum did require 
that such memoranda were signed by both the engagement partner and the EQR.  Yet, Marcum 
failed to sufficiently document these requirements in a written policy statement—such as a 
statement in an official policy manual—or otherwise communicate such requirements in a manner 
that would have provided reasonable assurance that the policy would be understood and complied 
with.  
53. Marcum’s failure to sufficiently document and communicate its policy led to 
practice inconsistency regarding the use of a memorandum in connection with delinquently archived 
binders.  The SEC Review also indicated that engagement partners did not sign off on such memos 
approximately 20% of the time, and EQRs did not sign off over 40% of the time.  
ENGAGEMENT QUALITY REVIEW 
54. In connection with engagement quality reviews, Marcum lacked sufficient policies, 
procedures, and monitoring related to the documentation of engagement quality reviews, as well as 
related to the objectivity of such reviews, as required by QC 20.03, QC 20.17, and QC 20.20.  This 
resulted in numerous engagements in violation of the underlying audit standard, AS 1220, which, 
among other things, requires that the EQR sufficiently document his or her review, including 
documents reviewed and the date he or she provided concurring approval of the issuance (AS 
1220.19), and requires that the EQR remain objective and not assume engagement team 
responsibilities (AS 1220.07).  
EQR Documentation  
55. At Marcum, engagement quality review procedures were documented via sign offs 
on routing slips, EQR memos, and sign offs on individual work papers in the engagement software.  
56. Work Paper Sign Offs.  The SEC Review revealed that approximately 33% of 
Marcum’s EQR sign offs—as limited to those work papers that explicitly required sign offs, per 
Marcum policy—were either signed post-issuance, or were missing.  Similar figures were found in 
Marcum’s Post-Issuance IPO Review.  Separately, in connection with quarterly reviews, Marcum 
EQRs often did not sign off on any work papers in the engagement software.  A sampling review, 
by SEC staff in the Division of Enforcement, of 15 quarterly review binders revealed that three of 
the 15 review binders contained no EQR sign offs, at all, on individual work papers via the 
engagement software.   

 
 
13 
57. Routing Slips.  At Marcum, routing slips purported to serve as documentation of the 
EQR’s concurring approval, and the date of such approval.  Yet, Marcum had a widespread practice 
of post-issuance sign offs on routing slips, including by EQRs.  In half of 28 audit binders sampled 
in the SEC Review, the EQR signed the routing slip post-issuance.  Such post-issuance sign offs 
failed to serve as an effective control to ensure that review procedures were completed and 
concurring approval obtained prior to issuance.  Such post-issuance sign offs also failed to 
document the completion of review procedures and concurring approval prior to issuance.  
58. EQR Memos.  At Marcum, EQR memos purported to serve as documentation of the 
EQR’s review procedures.  Similar to routing slips, Marcum also had a widespread practice of post-
issuance sign offs on EQR memos.  Marcum’s Post-Issuance IPO Review revealed that, as of one to 
three days following issuance, over half of work paper binders did not contain a signed EQR memo.  
The SEC Review reflected similar findings.  Moreover, delays in EQR memo sign offs typically ran 
in parallel with delays in routing slip sign offs; frequently, the two documents were signed off by 
the EQR in parallel—and both signed off post-issuance.  Indeed, the SEC Review found that in 13 
of 28 sampled audit binders, the EQR signed off post-issuance on both the routing slip and the EQR 
memo.  In such instances, neither the routing slip nor the EQR memo served as an effective control 
or sufficient documentation.  EQR memos were also typically signed only manually, and there are 
indications such sign offs were also signed with only manually-input dates that did not reflect the 
actual date on which the Marcum EQR signed the EQR memo. 
59. The above-noted deficiencies occurred against a backdrop in which Marcum was 
already on notice, for several years running, that the engagement quality review process was under 
stress.  This included repeated Marcum internal inspection findings flagging concerns that EQRs 
were not provided sufficient time to conduct their review procedures and that engagement teams 
were over-reliant on EQRs to catch deficiencies and documentation issues.  
EQR Objectivity   
60. While Marcum EQRs often conducted required sign offs only post-issuance, at the 
same time, in many instances, EQRs conducted their sign offs prior to relevant engagement partner 
sign offs.  The SEC Review revealed that at least 10% of EQR sign offs were conducted prior to the 
engagement partner signing off on the same work paper.  Additionally, with the institution, in early 
2021, of Marcum’s Post-Issuance IPO Review, internal communications repeatedly reflected that 
EQRs were asked to sign off on work papers, notwithstanding circumstances in which such work 
papers included open review notes or lacked engagement team sign offs.  In certain instances, 
engagement partners appeared to encourage such practices, including in a training presentation in 
which it was stated that due to SPAC’s tight timelines, Marcum could not “wait to put everything 
through a serial process,” and should instead conduct contemporaneous reviews.  
61. In other instances, the Marcum EQR refrained from signing off on work papers 
before the engagement partner, but provided direct guidance and feedback to the engagement 
manager—prior to engagement partner review.  This included, for example, an instance in which 
such guidance was provided prior to the engagement partner being assigned to the engagement.  

 
 
14 
DOCUMENTATION OF WARRANT ACCOUNTING PROCEDURES 
62. Among Marcum’s SPAC clients, virtually all issued warrants.  In connection with 
warrant accounting procedures, however, Marcum lacked sufficient policies, procedures, and 
monitoring to provide reasonable assurance that the work performed by the firm’s personnel with 
respect to the documentation of warrant accounting procedures would meet the requirements of the 
underlying audit standard, AS 1215, as required by QC 20.03, QC 20.17, and QC 20.20.  This 
resulted in numerous engagements in violation of AS 1215.  
63. Marcum’s memoranda documenting its warrant accounting procedures were 
consistently insufficient.  These internally prepared memos were not dated, did not reference the 
memo’s author, and did not reference the client’s name.  Such memos contained no citations or 
cross-references to the individual client’s warrant agreement or features.  Across clients, the 
language utilized and specific description of terms was virtually identical from memo to memo, and 
unchanged from the memo template, making it difficult to identify what procedures Marcum 
actually performed, including whether the underlying agreement was reviewed—in sufficient detail, 
or at all.  Notably, the template upon which such memos were based provided for only one 
accounting conclusion (equity treatment), and provided no guidance regarding any potential 
alternate conclusions, and no direction regarding potentially relevant client-specific information to 
analyze and correspondingly reference and detail in adapting the template memo.  
64. Marcum also received and purportedly reviewed client-prepared memoranda 
analyzing the proper accounting treatment for the client’s warrants.  Marcum’s documentation of its 
warrant accounting procedures in connection with client warrant accounting memos, however, was 
also consistently insufficient.  In almost all instances reviewed, the only comment by Marcum on 
the client memo was a summary comment at top, stating the date Marcum received the memo and 
the fact of Marcum’s review.  The lack of substantive auditor notations and comments make it 
difficult to identify what procedures Marcum actually performed in connection with its evaluation 
of the memo and the client’s accounting conclusion.  
65. Warrant accounting related work papers were also not consistently signed off on by 
either the engagement partner or EQR.  The SEC Review found that, among 28 audit binders 
sampled, over 60% had no EQR sign off on Marcum’s warrant accounting memo; engagement 
partners failed to sign off pre-issuance nearly 30% of the time.  Sign offs on the client-prepared 
warrant accounting memos were similar.  
66. Marcum’s annual internal inspection, conducted in the summer of 2021, revealed 
similar findings regarding insufficient documentation of warrant accounting procedures.  Among 38 
SPAC engagements inspected, 32 were required to be re-opened to add appropriate documentation, 
including, primarily, documentation related to warrant analysis and/or warrant valuation.  Inspector 
comments in connection with the internal inspection also frequently reflected that no evidence of 
warrant accounting procedures had been documented in relevant work papers.   
COMMUNICATIONS WITH AUDIT COMMITTEES 

 
 
15 
67. In connection with audit committee communications, Marcum lacked sufficient 
policies, procedures, and monitoring related to compliance with the underlying audit standard, AS  
1301, as required by QC 20.03, QC 20.17, and QC 20.20.  This resulted in numerous engagements 
in violation of this audit standard, including based upon insufficient communication of changes in 
significant risks to the audit committee, and the failure to sufficiently and accurately document the 
fact, timing, and method of audit committee communications.  
Timing and Mode of Audit Committee Communications  
68. Marcum’s work papers for many engagements reflected insufficient audit 
documentation related to the timing and/or the mode of communications with audit committees.  
This included instances in which the only documentation of relevant communications consisted of 
unsigned letters, including instances in which such letters still contained “track changes.”  
69. Marcum’s annual internal inspection, conducted in the summer of 2021, also 
revealed repeated instances in which there was insufficient documentation of audit committee 
communications.  This included findings that 9 out of 38 SPAC engagements examined did not 
contain the final audit committee letter in the relevant binder.  
70. Within Marcum’s SPAC practice, there was a common practice of oral, rather than 
written, audit committee communications.  Marcum’s policies did not sufficiently address the need 
to document the fact and timing of oral communications; Marcum also lacked sufficient procedures 
and monitoring to ensure that such oral communications were sufficiently documented. 
Substance of Audit Committee Communications  
71. Marcum’s annual internal inspection also revealed repeated instances in which 
Marcum’s communications to the audit committee failed to include newly identified significant 
risks—5 out of 38 engagements examined—in violation of AS 1301.11.  Marcum’s policies, 
procedures, and monitoring were insufficient to provide reasonable assurance that all requisite 
matters would be communicated to an issuer’s audit committee.  Notably, Marcum had already been 
made aware, in connection with the PCAOB’s 2019 inspection, that half of audits examined did not 
comply with the relevant audit standard.  
RISK ASSESSMENTS 
72. In connection with its performance of risk assessment procedures, Marcum lacked 
sufficient policies, procedures, and monitoring related to compliance with the underlying audit 
standard, AS 2110, as required by QC 20.03, QC 20.17, and QC 20.20.  This resulted in numerous 
SPAC engagements in violation of this audit standard, including based upon the failure to conduct 
risk assessments at the assertion level, and the failure to identify all relevant significant risks.  

 
 
16 
Assertion Level Risk Assessments  
73. Marcum’s SPAC practice failed to conduct risk assessments at the assertion level.  A 
review of nearly 80 SPAC audits conducted by SEC staff did not reveal a single instance, prior to 
2022, in which a SPAC audit included an assertion level risk assessment.   While Marcum did have 
a template work paper, called a “Risk Assessment Summary Form,” which outlined procedures 
including assertion level risk assessments, such work paper was never used in these SPAC 
engagements—despite the work paper being listed as a required sign off, for engagement partners 
and EQRs, in the relevant completion checklist.  
Identification of All Significant Risks  
74. Marcum’s SPAC practice also consistently failed to identify all relevant significant 
risks.  Prior to March 2020, Marcum’s planning meeting memos did not explicitly identify any 
significant risks, and most memos contained no reference to the significant risk of management 
override of controls.  Among memos dated between March 2020 and April 2021, virtually all 
memos identified only management override of controls as a significant risk, and up to 10% did not 
identify any significant risks.  It was within this time period that Marcum introduced a SPAC-
specific planning memo template, which identified management override—and only management 
override—as a significant risk.  
75. Marcum appears to have identified potential SPAC risks such as complex financial 
instruments, related party transactions, and contingent fees only rarely, and only starting in mid-
2021.  The identification of significant risks also did not appear correlated to the SPAC’s lifecycle 
stage.  Instead, the SPAC practice’s identification of significant risks correlated directly to the time 
period in which the memo was drafted, rather than the circumstances of individual clients.  
76. Marcum’s failure to conduct adequate risk assessments and sufficiently identify all 
significant risks is also illustrated by its planning meeting practices.  Several of Marcum’s SPAC 
engagement partners also followed a practice of conducting joint planning meetings, in which one 
planning meeting was held to discuss up to 27 separate SPAC clients, documented in one joint 
memo, whose discussion of significant risks was a single paragraph section designed to apply to all 
clients.   
TECHNICAL CONSULTATIONS 
77. In connection with technical consultations, also internally referred to as “national 
office” consultations, Marcum lacked sufficient policies, procedures, and monitoring to provide 
reasonable assurance that personnel obtained requisite and appropriate technical consultations, as 
required by QC 20.19, as well as QC 20.03, QC 20.17, and QC 20.20. 

 
 
17 
Obtaining Consultations When Appropriate  
78. Marcum lacked sufficient policies, procedures, and monitoring to provide reasonable 
assurance that personnel obtained consultations when appropriate.   
79. Marcum’s written policies on technical consultations provided insufficient and 
inconsistent guidance regarding when a consultation should, or must, be obtained.  In February 
2021, Marcum released a written policy on technical consultations that listed certain “required 
consultations.”  Yet, Marcum’s policy manual’s statement on technical consultations continued to 
contain no indication regarding when consultations were required.  
80. Moreover, prior to February 2021, Marcum had no policy explicitly indicating the 
circumstances under which technical consultations were required, noting only in its policy manual a 
handful of high-level scenarios that “might require consultation.”  
81. Outside of its written policies, Marcum lacked sufficient guidance regarding 
consultations; the decision to obtain a consultation was therefore left almost entirely to the 
engagement teams and their assigned engagement quality reviewers to determine.  Marcum also 
lacked any firm-wide procedures to track or monitor the request for, or occurrence of, technical 
consultations.  
82. Among the consultations explicitly required by Marcum’s policy were consultations 
in the event of any restatement.  Over the course of 2021, Marcum SPAC clients issued hundreds of 
restated financials, including restatements related to the accounting for warrants.  Yet, Marcum’s 
engagement teams did not request and receive a restatement consultation in connection with most 
SPAC restatements. 
Consultant Selection  
83. Marcum lacked sufficient policies, procedures, and monitoring to provide reasonable 
assurance that individuals consulted had appropriate levels of knowledge, competence, judgment, 
and authority.  Marcum had insufficient policies or procedures regarding consultant selection; while 
a listing of “subject matter experts” was made available on the firm’s intranet, the firm was not 
otherwise involved in an engagement team’s selection of any individual consultant.  Nor was the 
firm monitoring consultant selections, such that it could monitor whether individual consultants 
were appropriately qualified to consult in connection with specific engagements.  Consequently, 
Marcum could also not effectively monitor whether it had a sufficient number of appropriately 
qualified experts, including on a subject-matter specific basis.  
Consultation Quality  
84. Marcum lacked sufficient policies, procedures, and monitoring to provide reasonable 
assurance regarding consultation quality, including consultation procedures and documentation.  
Marcum had no firm-wide policies regarding how to request a consultation, or how to conduct 
consultation procedures.  There are indications this lack of formalities may have resulted in 

 
 
18 
miscommunications regarding the performance of technical consultations; for example, in at least 
one instance, an engagement partner believed she had obtained a consultation, while the 
“consultant” did not understand himself to have provided one.  
85. Marcum’s policy manual stated that “unusual, controversial,” “complex,” and 
“material” consultations should be documented, but there was no further guidance, including what 
form such documentation should take.  To the extent consultations were documented, many appear 
to have been documented in a cursory fashion. 
86. Additionally, Marcum was not monitoring consultation quality, including the 
sufficiency or appropriateness of consultation procedures and documentation.  
ENGAGEMENT PARTNER SUPERVISION AND REVIEW 
87. In connection with engagement partner supervision and review, Marcum lacked 
sufficient policies and procedures related to compliance with the underlying audit standard, AS 
1201, as required by QC 20.03 and QC 20.17.  This resulted in numerous engagements in violation 
of this audit standard.  
88. Within Marcum’s SPAC practice, insufficient partner supervision and review 
extended across many stages of engagement work.  Engagement partners frequently failed to 
sufficiently supervise and review engagement work in connection with each of the processes 
discussed above, including: 
89. Client acceptance, including adequate personnel capacity and client timing 
expectations. 
90. Client acceptance and management integrity, including timely receipt and review 
of background reports from all relevant parties.  
91. Audit documentation, including timely work paper sign offs and compliance with 
AS 1215. 
92. Engagement quality review (EQR), including documentation of review and 
concurring approval and compliance with AS 1220.  
93. Documentation of warrant accounting procedures and compliance with AS 1215.  
94. Audit committee communications, including timely communications with all 
requisite disclosures, and sufficient documentation of such communications in audit work papers, in 
compliance with AS 1301.  
95. Risk assessments, including conducting procedures at the assertion level and 
identifying all significant risks, in compliance with AS 2110.  

 
 
19 
96. In addition to the processes discussed above, Marcum partners also frequently failed 
to sufficiently supervise engagement work in connection with client intake and planning, and 
frequently failed to provide sufficient supervision and review of staff-level work.  
97. Client intake and planning.  Marcum’s engagement partners frequently failed to 
sufficiently supervise client intake and initial planning.  There was typically no initial conversation 
walking the client through the information and documents Marcum needed, resulting in the frequent 
receipt of late and incomplete information from clients.  
98. Oversight of staff-level work.  Marcum’s engagement partners frequently failed to 
sufficiently supervise engagement work conducted by staff-level personnel.  At the time staff-level 
work was conducted, Marcum often had not yet assigned an engagement manager, and there was 
often no contemporaneous supervision by the engagement partner.  Over time, with increased 
workload, Marcum increasingly assigned engagement managers later in the audit process.  The 
impact was that Marcum often had insufficient contemporaneous oversight of staff-level work.  This 
resulted in staff-level work quality that was repeatedly found substantially lacking, including work 
papers reflecting no work done at all, or work papers referencing erroneous or outdated information. 
99. Marcum’s system of quality control was not sufficient to provide reasonable 
assurance that supervision and review of audit work performed by engagement partners would be 
compliant with AS 1201. 
DUE PROFESSIONAL CARE 
100. As a result of the conduct described above, Marcum partners frequently failed to 
exercise due professional care in carrying out SPAC engagement work, in violation of AS 1015.   
101. Marcum’s system of quality control was not sufficient to provide reasonable 
assurance that SPAC engagement work would meet the requirements of AS 1015, as required by 
QC 20.03 and QC 20.17.  
TRAINING, DOCUMENTATION, AND COMMUNICATION OF POLICIES AND 
PROCEDURES, AND EVALUATION OF SUFFICIENCY OF TRAINING, PRACTICE 
AIDS, AND GUIDANCE 
102. Marcum’s evaluation and monitoring of its internal trainings related to SPAC 
engagements, and personnel compliance with firm-mandated training requirements, was 
insufficient, as required by QC 20.13 and QC 20.20.  There was also insufficient documentation and 
communication of SPAC policies and procedures, as required by QC 20.23 and QC 20.24.  
Relatedly, Marcum’s evaluation of the appropriateness of its training, guidance materials, and 
practice aids—which could serve to document and communicate such requirements—was also 
insufficient, as required by QC 20.20.  Marcum’s failure to adequately document and communicate 
policies and procedures related not only to SPAC-specific requirements, but also policies and 
procedures relevant to the firm’s public company practice generally.  

 
 
20 
103. The composition and size of Marcum’s SPAC practice changed dramatically 
between mid-2020 and mid-2021.  As late as September 2020, two engagement partners conducted 
virtually all SPAC IPO audit work.  Working alongside them were only nine managers, with two 
managers responsible for over half of such engagements.  Beginning in late 2020, dozens of 
Marcum partners, managers and staff who did not have previous SPAC experience were brought in 
to assist on engagements.  By mid-2021, at least 43 engagement partners and 75 managers were 
staffed on SPAC engagements.  Staff level personnel increased from 30 in mid-2020 to 80 by 2022.  
104. The influx of new personnel into Marcum’s SPAC practice—including many 
personnel who worked on only a handful of SPACs—elevated the importance of training activities, 
elevated the importance of formalizing and memorializing relevant policies and practices, and 
elevated the importance of evaluating and monitoring the sufficiency of relevance practice aids and 
guidance.  
105. Instead, the influx of new personnel exposed pre-existing deficiencies in Marcum’s 
practices related to training, documentation, and communication of policies and procedures.  While 
some of these deficiencies might have been partially ameliorated by sufficient partner supervision 
and review, based upon the conduct discussed above, Marcum lacked sufficient guidance, 
supervision, and review at the engagement partner level as well.  
Training  
106. Marcum conducted a training related to SPAC engagements, and purported to make 
the training mandatory for any manager or partner-level personnel, prior to conducting any SPAC 
engagement work.  Many SPAC planning memos also explicitly promised to assign to the 
engagement staff with “adequate SPAC industry experience” as a necessary step to address 
significant risks.  Marcum deemed attendance at its SPAC training sufficient to meet the “adequate 
SPAC industry experience” requirement.   
107. Yet, Marcum did not sufficiently monitor and enforce training attendance, and 
numerous personnel appear to have conducted SPAC engagement work prior to attending the 
relevant training.  
108. Marcum’s SPAC training also did not sufficiently address all relevant SPAC policies 
and procedures. 
Communication and Documentation of Policies and Procedures, and Evaluation of Practice Aids 
and Guidance 
109. Marcum did not memorialize its SPAC policies and procedures in any consistent 
fashion or centralized location.  In certain instances, Marcum’s SPAC practice appeared to deviate 
from standard documentation requirements without memorializing such practice deviations in any 
formal policy.  In lieu of any formal policy or centralized guidance document, the SPAC practice 

 
 
21 
typically relied upon email communications, which piecemeal guidance was not centralized and 
evolved over time.  
110. Marcum’s failure to memorialize relevant requirements in a consistent fashion and 
centralized location contributed to many of the audit standard and quality control violations 
described above and below. 
111. For example, internal communications among Marcum’s SPAC practice personnel 
repeatedly reflected questions and confusion regarding relevant policies and procedures, including 
on the part of national office personnel and other partners.  Some communications reflected that 
Marcum personnel did not know whether certain documentation was required, or how to comply 
with requirements.  Other communications reflected that personnel were not aware of sign off 
requirements.  In certain instances, communications reflected that personnel were not aware of 
which audit program or completion checklist to use, whether there even was an underlying audit 
program or completion checklist, or where or how to find such guidance.  Many questions raised 
could not be answered without explicit discussion with national office partners, indicating that 
Marcum’s pre-existing guidance did not appear to provide clear answers.  
112. Such questions and confusion also reflected Marcum’s failure to sufficiently 
evaluate, on an ongoing basis, the appropriateness and sufficiency of its training, guidance 
materials, and practice aids.  
113. For example, in light of certain concerns being raised, Marcum acknowledged that 
the relevant completion checklist had not been appropriately maintained or updated since its 
creation and needed significant work and updates, including SPAC customizations.  
114. Many of the questions raised, and confusion illustrated, related to Marcum’s policies 
and procedures relevant to public companies generally.  As such, it was reflective of broad and 
systemic deficiencies in Marcum’s documentation and communication of public company policies 
and procedures generally.  Notably, Marcum’s most recent annual internal inspection, conducted in 
the summer of 2021, not only concluded that 32 SPAC audits contained documentation deficiencies 
requiring the re-opening of the work paper binder—it also found that 37 non-SPAC audits also 
contained documentation deficiencies requiring re-opening.   
115. Marcum’s failure to sufficiently document and communicate relevant policies and 
procedures continued even after the SPAC market’s initial “boom.”  As late as August 2021, 
Marcum’s SPAC partners continued to flag substantial and substantive concerns, including that 
engagement managers failed to sufficiently understand relevant technical issues and certain audit 
standard requirements, and were insufficiently diligent in documenting and reviewing work papers.  
This included, for example, instances in which engagement partners stated managers and staff-level 
personnel were “copying and pasting” documentation from prior audits (including audits performed 
on different clients), without removing extraneous or inaccurate information, updating relevant 
technical references, or appropriately cross-referencing related work papers.  Partners also 
expressed concerns that managers, as well as some partners, were creating documentation without 

 
 
22 
sufficiently understanding the underlying accounting or valuation analysis, such as guidance 
received from internal technical specialists.   
116. Marcum relied upon an outside firm (“Firm A”) to conduct staff-level work on 
SPAC engagements.  Marcum’s communication of relevant policies and procedures to personnel at 
Firm A was also insufficient.  Marcum had no centralized or consistent source for guidance for Firm 
A personnel.  Firm A instead received ad hoc guidance from up to 20 different Marcum partners, a 
practice risking confusion and inconsistency.  Additionally, because Firm A was often conducting 
its work prior to a manager or partner being assigned to the engagement, in such instances there 
could be effectively no contemporaneous communication.  Firm A personnel also did not have full 
access to Marcum policies, procedures, and guidance documents.  Firm A personnel, while provided 
Marcum email addresses, were not on relevant SPAC email distribution lists, despite Marcum’s 
SPAC practice relying upon email as a primary mode of communication.  Firm A personnel did 
have access to Marcum work paper templates, but lacked sufficient guidance regarding which 
templates were appropriate and current.  Firm A personnel also did not attend relevant SPAC 
trainings until February 2021, and not all Firm A personnel attended.  
117. The insufficiencies described above also relate back to Marcum’s failure to 
sufficiently evaluate, prior to client acceptance, whether the firm had sufficient capacity to complete 
the engagement work with professional competence, including the capacity of the firm’s overall 
quality control system, including processes and systems to effectively train, educate, and 
communication with personnel.  
E. VIOLATIONS 
RULE 102(e) AND SECTION 4C OF THE EXCHANGE ACT 
118. Section 4C of the Exchange Act and Rule 102(e)(1)(ii) provide, in part, that the 
Commission may censure any person who is found by the Commission to have engaged in 
improper professional conduct.  With respect to persons licensed to practice as accountants, 
“improper professional conduct” includes either of the following two types of negligent conduct: 
(1) a single instance of highly unreasonable conduct that results in a violation of applicable 
professional standards in circumstances in which an accountant knows, or should know, that 
heightened scrutiny is warranted; or (2) repeated instances of unreasonable conduct, each resulting 
in a violation of applicable professional standards, that indicate a lack of competence to practice 
before the Commission.  Rule 102(e)(1)(iv)(B).  As a result of the conduct described above, 
Marcum engaged in “improper professional conduct” within the meaning of Exchange Act Section 
4C(a)(2) and Rule 102(e)(1)(ii).  
Due Professional Care in the Performance of Work (AS 1015) 
119. AS 1015 requires an auditor to exercise “due professional care ... in the planning 
and performance of the audit and the preparation of the report.”  AS 1015.01.  “[D]ue professional 
care concerns what the independent auditor does and how well he or she does it.”  AS 1015.04.  

 
 
23 
AS 1015.06 provides that “[t]he engagement partner is responsible for the assignment of tasks to, 
and supervision of, the members of the engagement team.”  
120. As a result of Marcum’s conduct described above, Marcum violated this standard in 
numerous engagements.  
Supervision of the Audit Engagement (AS 1201) 
121. AS 1201.03 provides that “the engagement partner is responsible for proper 
supervision of the work of engagement team members and for compliance with PCAOB 
standards.”  AS 1201.05(a) requires the engagement partner to “inform engagement team members 
of their responsibilities,” including, among other items, “the nature, timing, and extent of 
procedures they are to perform.”  The engagement partner should also “[r]eview the work of 
engagement team members to evaluate whether: (1) the work was performed and documented; (2) 
the objectives of the procedures were achieved; and (3) the results of the work support the 
conclusions reached.”  AS 1201.05(c).  AS 1201.06 requires that the engagement partner, in 
determining the extent of supervision necessary, take into account, among other items, “[t]he 
knowledge, skill, and ability of each engagement team member.”  
122. As a result of Marcum’s conduct described above, Marcum violated this standard in 
numerous engagements.  
Audit Documentation (AS 1215) 
123. AS 1215.06 requires that an “auditor must document the procedures performed, 
evidence obtained, and conclusions reached with respect to relevant financial statement assertions.  
Audit documentation must clearly demonstrate that the work was in fact performed . . . .  Audit 
documentation must contain sufficient information to enable an experienced auditor, having no 
previous connection with the engagement, (a) to understand the nature, timing, extent, and results 
of the procedures performed, evidence obtained, and conclusions reached, and (b) to determine 
who performed the work and the date such work was completed as well as the person who 
reviewed the work and the date of such review.”  
124. AS 1215.15 requires that “[p]rior to the report release date, the auditor must have 
completed all necessary auditing procedures and obtained sufficient evidence to support the 
representations in the auditor’s report.”  AS 1215.15 also requires that “[a] complete and final set 
of audit documentation should be assembled for retention as of a date not more than 45 days after 
the report release date (documentation completion date).  If a report is not issued in connection 
with an engagement, then the documentation completion date should not be more than 45 days 
from the date that fieldwork was substantially completed.  If the auditor was unable to complete 
the engagement, then the documentation completion date should not be more than 45 days from the 
date the engagement ceased.”  
125. As a result of Marcum’s conduct described above, Marcum violated this standard in 
numerous engagements.  

 
 
24 
Engagement Quality Review (AS 1220) 
126. AS 1220.07 requires that “[t]o maintain objectivity, the engagement quality 
reviewer  ... should not make decisions on behalf of the engagement team or assume any of the 
responsibilities of the engagement team.” 
127. AS 1220.19 requires that “[d]ocumentation of an engagement quality review should 
contain sufficient information to enable an experienced auditor, having no previous connection 
with the engagement, to understand the procedures performed by the engagement quality reviewer 
... to comply with the provisions of this standard, including information that identifies,” among 
other items: “[t]he documents reviewed by the engagement quality reviewer,” and “[t]he date the 
engagement quality reviewer provided concurring approval of the issuance.”  
128. As a result of Marcum’s conduct described above, Marcum violated this standard in 
numerous engagements.  
Communications with Audit Committees (AS 1301) 
129. AS 1301.11 requires that an auditor “communicate to the audit committee 
significant changes to the planned audit strategy or the significant risks initially identified and the 
reasons for such changes.”  
130. AS 1301.25 requires that an auditor communicate to the audit committee the 
matters required under the standard, AS 1301, either orally or in writing, and that the auditor “must 
document the communications in the work papers, whether such communications took place orally 
or in writing.”  AS 1301.26 requires that “[a]ll audit committee communications required by this 
standard should be made in a timely manner and prior to the issuance of the auditor’s report.”  
131. As a result of Marcum’s conduct described above, Marcum violated this standard in 
numerous engagements.  
Identifying and Assessing Risks of Material Misstatement (AS 2110) 
132. AS 2110.59 requires that an auditor “identify and assess the risks of material 
misstatement at the financial statement level and the assertion level.”  
133. AS 2110.59(f) requires that an auditor “[d]etermine whether any of the identified 
and assessed risks of material misstatement are significant risks,” based upon the factors relevant to 
identifying significant risks outlined at AS 2110.70-71.  AS 2110.69 requires that an auditor’s 
identification of fraud risks includes the risk of management override of controls.  
134. As a result of Marcum’s conduct described above, Marcum violated this standard in 
numerous engagements.  
PCAOB Quality Control Standards (QC 20) 

 
 
25 
135. PCAOB Quality Control Standards, specifically QC 20.01, provides that “a CPA 
firm shall have a system of quality control for its accounting and auditing practice.”  QC 20.03 
broadly defines a system of quality control as “a process to provide the firm with reasonable 
assurance that its personnel comply with applicable professional standards and the firm’s standards 
of quality.”  QC 20.04 provides that “[t]he nature, extent, and formality of a firm’s quality control 
policies and procedures should be appropriately comprehensive and suitably designed in relation to 
the firm’s size, the number of its offices, the degree of authority allowed its personnel and offices, 
the knowledge and experience of its personnel, the nature and complexity of the firm’s practice, 
and appropriate cost-benefit considerations.”  
136. QC 20.13 requires a firm to have policies and procedures to provide reasonable 
assurance that “[w]ork is assigned to personnel having the degree of technical training and 
proficiency required in the circumstances,” and that “[p]ersonnel participate in general and 
industry-specific continuing professional education and other professional development activities 
that enable them to fulfill responsibilities assigned.”  
137. QC 20.14 requires a firm to establish policies and procedures related to the 
acceptance and continuance of clients and engagements, and that such policies and procedures are 
sufficient to provide the firm “reasonable assurance that the likelihood of association with a client 
whose management lacks integrity is minimized.”  
138. QC 20.15(a) requires that a firm’s policies and procedures related to acceptance and 
continuance of clients and engagements are sufficient to provide reasonable assurance that the firm 
“undertakes only those engagements that the firm can reasonably expect to be completed with 
professional competence.”  
139. QC 20.17 requires a firm to have policies and procedures to provide reasonable 
assurance that work performed by engagement personnel complies with professional standards and 
the firm’s own standards of quality.  QC 20.18 provides that these policies and procedures should 
cover, among other things, “planning, performing, supervising, reviewing, documenting, and 
communicating the result of each engagement,” as well as engagement quality reviews.  
140. QC 20.19 requires a firm to have policies and procedures sufficient to provide 
reasonable assurance that personnel, among other things, “consult, on a timely basis, with 
individuals within or outside the firm, when appropriate,” including that “[i]ndividuals consulted [] 
have appropriate levels of knowledge, competence, judgment, and authority.”  
141. QC 20.20 also imposes requirements on firms to properly monitor whether the 
firm’s quality control policies and procedures are suitably designed and are being effectively 
applied.   
142. QC 20.23 requires a firm to “communicate its quality control policies and 
procedures to its personnel in a manner that provides reasonable assurance that those policies and 
procedures are understood and complied with.”  QC 20.24 provides that “[t]he size, structure, and 

 
 
26 
nature of the practice of the firm should be considered in determining whether documentation of 
established quality control policies and procedures is required for effective communication and, if 
so, the extent of such documentation,” stating that “documentation of established quality control 
policies and procedures would generally be expected to be more extensive in a large firm than in a 
small firm and in a multioffice firm than in a single-office firm.”  
143. As a result of Marcum’s conduct described above, Marcum violated QC 20. 
MARCUM VIOLATED RULE 2-02(b)(1) OF REGULATION S-X 
144. Rule 2-02(b)(1) of Regulation S-X requires an accountant’s report to state the 
applicable professional standards under which the audit was conducted.  
145. Through the conduct described above, Marcum violated Rule 2-02(b)(1) of 
Regulation S-X in connection with the issuance of numerous SPAC audit reports, all of which 
stated that Marcum had conducted its audit in accordance with PCAOB standards.  
E.  FINDINGS 
146. Based on the foregoing, the Commission finds that Respondent violated Rule 2-
02(b)(1) of Regulation S-X.  
147. Based on the foregoing, the Commission finds that Respondent engaged in 
improper professional conduct pursuant to Sections 4C(a)(2) of the Exchange Act and Rule 
102(e)(1)(ii).  
F. REMEDIAL EFFORTS 
148. In connection with the conduct described above, Marcum has undertaken certain 
remedial steps, including revisions to certain quality control policies and procedures.  Such efforts 
have been considered by the Commission in determining to accept Marcum’s Offer, and will be 
reviewed by the Independent Consultant, as described below.  
G. UNDERTAKINGS  
INDEPENDENT CONSULTANT 
149. Respondent Marcum shall retain, within sixty (60) days after the entry of this 
Order, an independent consultant (“Independent Consultant”), not unacceptable to the Commission 
Staff in the Division of Enforcement (“Commission Staff”) and the PCAOB Staff.  Marcum shall 
provide the Commission Staff and the PCAOB Staff with notice of possible Independent 
Consultant candidates no later than thirty (30) days following the entry of this Order.  The 
Commission Staff and the PCAOB Staff shall have ten (10) business days to communicate whether 
the Independent Consultant candidates are not unacceptable to the Commission Staff and the 
PCAOB Staff.  Marcum shall, upon request by the Commission Staff or the PCAOB Staff, provide 

 
 
27 
information about the Independent Consultant’s work plan to the Commission Staff and the 
PCAOB Staff including the Independent Consultant’s experience, ability to staff the engagement, 
and expertise in auditing and audit firm quality controls.  Marcum shall provide to the Commission 
Staff and the PCAOB Staff a copy of the engagement letter detailing the scope of the Independent 
Consultant’s responsibilities within three (3) months after the entry of this Order.  If requested by 
Commission Staff or the PCAOB Staff, Marcum shall make the Independent Consultant available 
to Commission Staff and the PCAOB Staff to make presentations, provide updates, and explain the 
work, progress, and conclusions.  The Independent Consultant’s compensation and reasonable 
expenses shall be borne exclusively by Marcum. 
(i). Independence 
150. To ensure the independence of the Independent Consultant, Marcum: shall not 
have the authority to terminate the Independent Consultant or substitute another independent 
consultant for the initial Independent Consultant, without the prior written approval of the 
Commission Staff and the PCAOB Staff; and shall compensate the Independent Consultant and 
persons engaged to assist the Independent Consultant for services rendered pursuant to this Order 
at their reasonable and customary rates. 
151. Marcum will require the Independent Consultant to enter into an agreement that 
provides that, for the period of engagement and for a period of two (2) years after the issuance of 
the Independent’s Consultant’s final report (as defined in Paragraph 159), the Independent 
Consultant shall not enter into any employment, consultant, attorney-client, auditing or other 
professional relationship with Marcum, or any of its present or former affiliates, directors, officers, 
partners, employees, or agents acting in their capacity as such. The agreement will also provide 
that the Independent Consultant will require that any firm with which he/she is affiliated or of 
which he/she is a member, and any person engaged to assist the Independent Consultant in the 
performance of his/her duties under this Order shall not, without prior written consent of the 
Commission Staff and the PCAOB Staff, enter into any employment, consultant, attorney-client, 
auditing or other professional relationship with Marcum, or any of its present or former affiliates, 
directors, officers, partners, employees, or agents acting in their capacity as such for the period of 
the engagement and for a period of two (2) years after the issuance of the Independent Consultant’s 
final report (as defined by Paragraph 159). 
152. With respect to Commission Staff and the PCAOB Staff, Marcum will not assert 
any legal privilege over communications with or work product prepared by the Independent 
Consultant. 
(ii). Scope of Independent Consultant’s Review 
153. Within the time periods specified below, the Independent Consultant will review 
and evaluate Marcum’s audit, review, and quality control policies and procedures as to, among 
other aspects, their sufficiency, adequacy, design, implementation, operation, and effectiveness, 

 
 
28 
applicable to Audit Clients
7
 regarding the subjects set forth below.  The Independent Consultant’s 
purpose for this review and evaluation will be to make recommendations for improvements to 
policies and procedures that: 
a. Provide reasonable assurance that personnel comply with applicable 
professional standards and the firm’s standards of quality (see QC 20.03, 
QC 20.17, and QC 20.20) including: 
1. That due professional care is exercised in the planning and performance 
of the audit and the preparation of the report.  See AS 1015. 
2. That engagement partners are properly supervising the work of 
engagement team members and for compliance with PCAOB standards, 
including reviewing the work of engagement team members to evaluate 
whether the work was performed and documented, the objectives of the 
procedures were achieved, and the results of the work support the 
conclusions reached.  See AS 1201. 
3. That auditors are documenting the procedures performed, evidence 
obtained, and conclusions reached with respect to relevant financial 
statement assertions, and that audit documentation contains sufficient 
information for an experienced auditor, having no previous connection 
with the engagement to (a) understand the nature, timing, extent, and 
results of the procedures performed, evidence obtained, and conclusions 
reached, and (b) to determine who performed the work and the date such 
work was completed as well as the person who reviewed the work and 
the date of such review. See AS 1215.06. 
4. That audit documentation and other documents, including emails that 
contain audit documentation, are being retained for the length of time 
required by PCAOB standards and Commission rules or SEC 
regulations, unless a longer period of time is otherwise required by law.  
See AS 1215.14.  
5. That prior to the audit report release date, the auditor completed all 
necessary auditing procedures and obtained sufficient evidence to 
support the representations in the auditor’s report.  See AS 1215.15.  
6. That a complete and final set of audit documentation is assembled for 
retention as of a date not more than 45 days after the report release date 
                                                 
7
 An “Audit Client,” for purposes of these undertakings, means any SEC registrant or any client 
for which the audit or review was required by the federal securities laws. 

 
 
29 
(“documentation completion date”) and that documentation 
requirements are also met for unfinished or incomplete engagements.  
See AS 1215.15. 
7. That audit documentation is not deleted or discarded after the 
documentation completion date and that any information and 
documentation added after the documentation completion date must 
indicate the date the information was added, the name of the person who 
prepared the additional documentation, and the reason for adding it.  See 
AS 1215.16. 
8. That engagement quality reviewers and others who assist the reviewer 
should not make decisions on behalf of the engagement team or assume 
any of the responsibilities of the engagement team.  See AS 1220.07.  
9. That engagement quality review should contain sufficient information to 
enable an experienced auditor, having no previous connection with the 
engagement, to understand the procedures performed by the engagement 
quality reviewer, and others who assisted the reviewer, to comply with 
the provisions of this standard, including information that identifies: (a) 
the documents reviewed by the engagement quality reviewer, and others 
who assisted the reviewer, and (b) the date the engagement quality 
reviewer provided concurring approval of issuance or, if no concurring 
approval of issuance was provided, the reasons for not providing the 
approval. See AS 1220.19. 
10. That the auditor is communicating to the audit committee significant 
risks identified and any changes throughout the course of the 
engagement.  See AS 1301.09 and .11. 
11. That the auditor is communicating to the audit committee the matters 
required to be communicated by AS 1301, either orally or in 
writing, unless otherwise specified in AS 1301, and is documenting 
those communications in the work papers, including whether such 
communications took place orally or in writing.  See AS 1301.25. 
12. That all audit committee communications required by AS 1301 are 
made in a timely manner and prior to the issuance of the auditor’s 
report.  See AS 1301.26. 
13. That the auditor is identifying and assessing the risks of material 
misstatement at the financial statement level and the assertion level.  See 
AS 2110.59. 
14. That the auditor is identifying and assessing significant risks consistent with AS 

 
 
30 
2110.69, 70, and .71. 
b. Provide the firm with reasonable assurance that the policies and procedures 
established by the firm for each of the elements of quality control described 
in QC 20 are suitably designed and are being effectively applied, as 
applicable to the audit standards cited in this Order.  See QC 20.03, QC 
20.17, and QC 20.20; AS 1015; AS 1201; AS 1215.06, .14, .15, and .16; AS 
1220.07 and .19; AS 1301; and AS 2110.59, .69, .70, and .71. 
c. Provide the firm with reasonable assurance that work is assigned to personnel 
having the degree of technical training and proficiency required in the 
circumstances and that personnel participate in general and industry-specific 
continuing professional education and other professional development 
activities that enable them to fulfill responsibilities assigned.  See QC 
20.13(b) and (c). 
d. Provide the firm with reasonable assurance that the likelihood of association 
with a client whose management lacks integrity is minimized.  See QC 20.14. 
e. Provide the firm with reasonable assurance that the firm undertakes only 
those engagements that the firm can reasonably expect to be completed with 
professional competence, including, but not limited to policies and 
procedures related to the client acceptance process, the Client Acceptance 
Committee, and staffing capacity as related to client acceptance.  See QC 
20.15(a). 
f. Provide the firm with reasonable assurance that personnel refer to 
authoritative literature or other sources and consult, on a timely basis, with 
individuals within or outside the firm, when appropriate and that the 
individuals consulted should have appropriate levels of knowledge, 
competence, judgment, and authority.  See QC 20.19. 
g. Provide the firm with reasonable assurance that quality control policies and 
procedures are being communicated to personnel and that they are understood 
and complied with, and that the firm has established a means of 
communicating its established quality control policies and procedures, and 
the changes thereto, to appropriate personnel on a timely basis.  See QC 
20.23; QC 20.24. 
154. Marcum shall cooperate fully with the Independent Consultant and shall provide 
reasonable and timely access to any firm personnel, information, and records (including audit and 
consultation documents) as the Independent Consultant may reasonably request for the 
Independent Consultant’s review and evaluation described in Paragraph 153 above and the reports 
specified in Paragraphs 155 through 162 below. 

 
 
31 
(iii). Independent Consultant Reports and Certifications 
155. Within eight (8) months after the entry of this Order, Marcum shall require the 
Independent Consultant to issue a detailed written report (“Initial Report”) to Marcum: (i) 
summarizing the Independent Consultant’s review and evaluation of the areas identified in 
Paragraph 153 and its subsections above; and (ii) making recommendations, where appropriate, 
reasonably designed to ensure that audits conducted by Marcum comply with PCAOB standards 
and rules and any applicable federal securities laws.  Marcum shall require the Independent 
Consultant to provide a copy of the Initial Report to the Commission Staff and the PCAOB Staff 
when the Initial Report is issued.  Marcum shall also make the Independent Consultant available to 
Commission Staff and the PCAOB Staff to discuss its work both periodically and after issuance of 
the report. 
156. Marcum will adopt and implement, as soon as practicably possible, but in any 
event no later than two (2) years after the entry of this Order, and in compliance with the 
requirements set forth in Paragraphs 157-163 below, all recommendations of the Independent 
Consultant in the Initial Report.  Provided, however, that within thirty (30) days of issuance of the 
Initial Report, Marcum may advise the Independent Consultant in writing of any recommendation 
that it considers to be unnecessary, unjust, outside the scope of this Order, unduly burdensome, or 
impractical.  Marcum need not adopt any such unnecessary, unjust, outside the scope of this Order, 
unduly burdensome, or impractical recommendation at that time, but instead may propose in 
writing to the Independent Consultant an alternative recommendation (an “Alternative 
Recommendation”) designed to achieve the same objective or purpose.  Marcum will provide any 
such Alternative Recommendation(s) to the Commission Staff and the PCAOB Staff at the same 
time that Marcum submits such Alternative Recommendation(s) to the Independent Consultant.  
Marcum and the Independent Consultant shall engage in good faith negotiations in an effort to 
reach agreement on any recommendations objected to by Marcum.  
157. In the event that the Independent Consultant and Marcum are unable to agree on 
any Alternative Recommendation(s) within sixty (60) days of the issuance of the Initial Report, 
Marcum shall abide by the determinations of the Independent Consultant.    
158. Within sixty (60) days of issuance of the Initial Report, Marcum will certify to the 
Commission Staff and the PCAOB Staff in writing that (i) Marcum has adopted and has 
implemented or will implement all recommendations of the Independent Consultant; and (ii) the 
Independent Consultant agrees that Marcum has adopted, implemented, and/or has a plan for 
implementation (the “Certification of Agreement to Adopt Recommendations”).  Marcum will 
provide a copy of the Certification of Agreement to Adopt Recommendations to the Commission 
Staff and the PCAOB Staff.  To the extent that Marcum has not implemented all recommendations 
contained in the Initial Report by that time, Marcum will certify to the Commission Staff and the 
PCAOB Staff in writing, no later than thirty (30) days after their implementation, that (i) Marcum 
has adopted and has implemented all recommendations contained in the Initial Report; and (ii) the 
Independent Consultant agrees that the recommendations have been adequately adopted and 
implemented by Marcum (“Implementation Certification”).  

 
 
32 
159. Within six (6) months of the issuance of the Initial Report or the Implementation 
Certification, whichever is later, Marcum shall require the Independent Consultant to complete 
testing to assess (i) whether Marcum has implemented the written policies and procedures 
concerning the areas specified in Paragraph 153 and its subsections above and (ii) the effectiveness 
of the design and implementation of those policies and procedures.  At least thirty (30) days prior 
to beginning the testing, Marcum shall provide to the Commission Staff and the PCAOB Staff a 
copy of the scope and parameters for testing.  The Commission Staff and the PCAOB Staff shall 
have ten (10) days to provide comments.  Within thirty (30) days of the completion of this testing, 
Marcum shall require the Independent Consultant to issue a written report summarizing the results 
of the Independent Consultant’s testing and assessment, and if applicable, any recommendations 
(“Final Report”) and to provide a copy of the Final Report to the Commission Staff and the 
PCAOB Staff.  At this time, if the Independent Consultant determines that Marcum has adopted 
and implemented all recommendations set forth in the Initial Report and that Marcum’s quality 
control policies addressing those recommendations and the policies specified in Paragraph 153 and 
its subsections are functioning effectively, Marcum shall require the Independent Consultant to 
certify in writing that Marcum has satisfied such undertakings (“Independent Consultant 
Certification”) and provide a copy of this certification to the Commission Staff and the PCAOB 
Staff.  In all events, Marcum must complete all undertakings concerning the implementation of the 
recommendations set forth in the Independent Consultant’s Initial Report, and any amended 
recommendations, and provide the Independent Consultant Certification to the Commission Staff 
no later than two (2) years after the entry of this Order. 
160. To the extent that the Final Report has additional recommendations that Marcum 
has not implemented, within thirty (30) days of issuance of the Final Report, Marcum will certify 
to the Commission Staff and the PCAOB Staff in writing that it has adopted and has implemented 
or will implement all additional recommendations of the Independent Consultant (“Final 
Certification of Agreement to Adopt Recommendations”).  Marcum will provide a copy of the 
Final Certification of Agreement to Adopt Recommendations to the Commission Staff and the 
PCAOB Staff.  To the extent that Marcum has not implemented all additional recommendations 
contained in the Final Report by that time, Marcum will certify to the Commission Staff and the 
PCAOB Staff in writing, by thirty (30) days after their implementation, that Marcum has adopted 
and has implemented all recommendations contained in the Final Report (“Final Implementation 
Certification”).  In all events, Marcum must complete all undertakings concerning the 
implementation of the recommendations set forth in the Independent Consultant’s Final Report no 
later than four (4) months after the issuance of the Final Report. 
161. The Initial Report, Final Report, Certification of Agreement to Adopt 
Recommendations, Implementation Certification, Independent Consultant Certification, Final 
Certification of Agreement to Adopt Recommendations, and Final Implementation Certification, 
and any related correspondence or other documents shall be submitted to Laura B. Josephs, 
Assistant Director, Division of Enforcement, Securities and Exchange Commission, 100 F Street 
NE, Washington DC, 20549, with a copy to the Office of Chief Counsel of the Enforcement 
Division, and to the PCAOB, Director of Enforcement and Investigations, 1666 K Street NW, 
Washington DC, 20006. 

 
 
33 
162. The Initial Report and Final Report by the Independent Consultant will likely 
include confidential financial, proprietary, competitive business or commercial information.  
Public disclosure of these reports could discourage cooperation, impede pending or potential 
government investigations or undermine the objectives of the reporting requirement.  For these 
reasons, among others, these reports and the contents thereof are intended to remain and shall 
remain non-public, except (1) pursuant to court order, (2) as agreed to by the parties in writing, (3) 
to the extent that the Commission determines in its sole discretion that disclosure would be in 
furtherance of the Commission’s discharge of its duties and responsibilities, or (4) is otherwise 
required by law. 
163. No later than sixty (60) days from the date that Marcum signs the Final 
Implementation Certification, Marcum’s CEO and Marcum’s leader of quality control policies and 
procedures shall both certify, in writing, compliance with the undertakings set forth above.  The 
certification shall identify the undertakings, provide written evidence of compliance in the form of 
a narrative, and be supported by exhibits sufficient to demonstrate compliance.  The Commission 
Staff may make reasonable requests for further evidence of compliance, and Marcum agrees to 
provide such evidence.  This certification and supporting material shall be submitted to Laura B. 
Josephs, Assistant Director, Division of Enforcement, Securities and Exchange Commission, 100 F 
Street NE, Washington DC, 20549, with a copy to the Office of Chief Counsel of the Enforcement 
Division, 100 F Street NE, Washington DC, 20549,  and to the PCAOB, Director of Enforcement 
and Investigations, 1666 K Street NW, Washington DC, 20006, no later than sixty (60) days from 
the date of the completion of the undertakings. 
164. For good cause shown, and solely at the discretion of the Commission Staff and 
the PCAOB Staff, the Commission Staff and PCAOB Staff may extend any of the procedural dates 
relating to the undertakings.  Deadlines for procedural dates shall be counted in calendar days, 
except that if the last day falls on a weekend or federal holiday, the next business day shall be 
considered to be the last day. 
165. If the Commission Staff believes that Marcum has not satisfied these 
undertakings, the Commission Staff may petition the Commission to reopen the matter to 
determine whether additional sanctions are appropriate. 
MARCUM’S ACCEPTANCE OF NEW ISSUER AUDIT CLIENTS 
166. Between the date of entry of this Order and the date on which Marcum provides a 
copy of the Certification of Agreement to Adopt Recommendations to the Commission Staff, 
and pursuant to the Independent Consultant’s review and approval as provided in Paragraph 168, 
Marcum shall accept no more than three (3) new audit clients (“New Audit Clients”) per quarter.
8
  
                                                 
8
 A New Audit Client is defined as an entity seeking audit services from Marcum that is (a) an 
issuer, as that term is defined in Section 2(a)(7) of the Sarbanes-Oxley Act of 2002; or (b) is 
seeking audit services for the purpose of registering securities with the Commission. 

 
 
34 
Quarters shall be calculated starting with the date of entry of this Order, running in ninety (90) day 
increments thereafter.  In the event that Marcum has attrition of non-SPAC audit clients (“Non-
SPAC Audit Clients”
9
) that Marcum is serving as of the date of this Order, Marcum may accept 
additional New Audit Clients equal to the number of departed Non-SPAC Audit Clients, but may 
not in any event accept more than a total of two (2) additional New Audit Clients per quarter.  
To the extent that Marcum accepts fewer New Audit Clients than the maximum allowable within a 
quarter, the number of allowable New Audit Clients will “rollover” into subsequent quarters.  The 
Independent Consultant shall report to the Commission Staff on a quarterly basis the New Audit 
Clients Marcum has accepted and will confirm that the Independent Consultant has approved 
acceptance of such New Audit Clients pursuant to the New Audit Client Protocol described in 
Paragraph 168.  The Independent Consultant shall not approve any New Audit Client that meets 
the criteria described in Paragraph 168.  
167. Between the date of entry of this Order and the date on which Marcum provides a 
copy of the Certification of Agreement to Adopt Recommendations to the Commission Staff, 
Marcum shall not accept any New Audit Clients that meet any of the following criteria:  
a. the new engagement would begin after September 30 of the year under audit for 
December 31 year-end audits, or more than nine (9) months after the prior fiscal 
year-end date for year-end audits of entities with fiscal year-ends other than 
December 31;  
b. the New Audit Client conducts the majority of its operations from outside of the 
United States, unless such foreign operations of the New Audit Client are audited 
by a PCAOB-registered firm serving as an “other auditor,” as defined by AS 2101, 
as amended, paragraph .A5; or for New Audit Clients that do not have operations, 
its principal executive offices are located outside the United States; 
c. the New Audit Client has an un-remediated material weakness in its internal 
controls over financial reporting (a “MWICFR”); or 
d. the New Audit Client has received an audit report containing an explanatory 
paragraph indicating that a substantial doubt about its ability to continue as going 
concern existed as of the end of the past fiscal year.   
                                                 
9
 A Non-SPAC Audit Client is defined as an entity that (a) is not and was not a special purpose 
acquisition company (“SPAC”) and (b) is (i) an issuer, as that term is defined in Section 2(a)(7) 
of the Sarbanes-Oxley Act of 2002, or (iii) receiving audit services from Marcum for the purpose 
of registering securities with the Commission.  

 
 
35 
168. Between the date of entry of this Order and the date on which Marcum provides a 
copy of the Implementation Certification to the Commission Staff, the Independent Consultant 
shall review and approve any New Audit Clients, pursuant to the following:  
a. Marcum shall provide the Independent Consultant a minimum of sixty (60) days to 
prepare a written protocol for reviewing and approving the New Audit Clients 
(“New Audit Client Protocol”).  The sixty (60) day period shall commence on the 
date upon which the Independent Consultant is formally retained by Marcum.  
Marcum shall require the Independent Consultant to provide a copy of the New 
Audit Client Protocol to the Commission Staff.  The Commission Staff shall have 
ten (10) business days to communicate whether the New Audit Client Protocol is 
not unacceptable to the Commission Staff.  The New Audit Client Protocol shall 
outline, at a sufficient level of detail, procedures to be performed in connection with 
the review of any prospective New Audit Client, including documents and 
information to be requested and reviewed, factors to be analyzed, and discussions, 
meetings, or interviews to be held, as needed.  The New Audit Client Protocol shall 
also outline documentation to be created, in connection with the review of any 
prospective New Audit Client, which documentation shall memorialize, at a 
sufficient level of detail, procedures performed and conclusions reached in 
connection with the review of any prospective New Audit Client (the “New Audit 
Client Acceptance Documentation”).  The New Audit Client Protocol shall also 
take into consideration the following factors: 
i. whether as of the date the proposed new engagement is considered, 
Marcum’s policies, procedures, and quality control system, as known or 
observed by the Independent Consultant at the time of acceptance are 
sufficient for Marcum to conduct the engagement in accordance with all 
applicable professional standards;  
ii. whether the proposed engagement partner, EQR, and engagement team 
members at the level of manager and above possess the requisite 
competence, experience, and technical proficiency to conduct the 
engagement in accordance with PCAOB auditing standards;  
iii. whether the proposed engagement partner, EQR, and engagement team 
members have sufficient capacity to complete their respective 
responsibilities within the requisite time frame and with professional 
competence and in accordance with all applicable professional standards; 
iv. whether the staffing resources proposed to be dedicated to the engagement 
are sufficient to conduct the engagement in accordance with applicable 
professional standards; and  

 
 
36 
v. whether the New Audit Client has reported a remediated MWICFR as of the 
previous fiscal year-end, and its impact on the client acceptance decision.  
b. Marcum shall require the Independent Consultant to apply the New Audit Client 
Protocol to assess and approve any New Audit Clients.  New Audit Client 
Acceptance Documentation must be completed, in a sufficient level of detail, in 
connection with the review of any prospective New Audit Client; such 
documentation must also be sufficient to reflect the date upon which the New Audit 
Client Protocol procedures were performed, and that such procedures were 
performed prior to any formal acceptance of the New Audit Client by Marcum.  
In the event the Independent Consultant does not approve the acceptance of a New 
Audit Client, Marcum shall not accept the client. 
c. Marcum shall maintain all New Audit Client Acceptance Documentation for a 
period of seven (7) years, regardless of whether a New Audit Client was accepted, 
and shall make such documentation available to Commission Staff upon request, 
within five (5) business days of any such request.   
MARCUM ASIA 
169. Marcum shall ensure that all Independent Consultant recommendations adopted 
and implemented by Marcum as described in Paragraphs 155 through 165 will also be adopted and 
implemented by Marcum Asia. 
170. Certifications by Marcum required by Paragraphs 158 and 160 (Certification of 
Agreement to Adopt Recommendations; Implementation Certification; Final Certification of 
Agreement to Adopt Recommendations; and Final Implementation Certification) shall include 
parallel representations by Marcum regarding adoption and implementation for Marcum Asia. 
171. From the date of entry of this Order until the date of the Implementation 
Certification, all Marcum Asia New Audit Clients
10
 will be reviewed and approved by the 
Independent Consultant pursuant to the requirements described in Paragraph 168.  Except, 
however, the Independent Consultant will not approve any Marcum Asia New Audit Client that 
conducts the majority of its operations from within the United States or whose principal executive 
offices are in the United States.   
                                                 
10
 A Marcum Asia New Audit Client is defined as an entity seeking audit services from Marcum 
Asia that is (a) an issuer as that term is defined in Section 2(a)(7) of the Sarbanes-Oxley Act of 
2002; (b) registered with the Commission; or (c) for the purpose of registering securities with the 
Commission from the date of entry of this Order. 

 
 
37 
TRAINING AND PROFESSIONAL DEVELOPMENT 
172. Marcum shall require each audit professional to undergo training, as applicable, 
related to changes to the firm’s policies and procedures that result from the Independent 
Consultant’s Initial Report and Final Report. 
COMMUNICATION TO AUDIT PROFESSIONALS 
173. Marcum shall inform its audit professionals of the terms of the Order within ten 
(10) days after entry of the Order. 
IV. 
In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent’s Offer.  
Accordingly, it is hereby ORDERED, effective immediately, that:  
A.  Respondent shall cease and desist from committing or causing any violations and 
any future violations of Rule 2-02(b)(1) of Regulation S-X. 
B. Respondent is censured. 
C.  Respondent shall comply with its undertakings enumerated in Paragraphs 149-173 
of Section III above.  
D.   Respondent shall, within 10 days of the entry of this Order, pay a civil money 
penalty in the amount of $10 million to the Securities and Exchange Commission.  If timely 
payment is not made, additional interest shall accrue pursuant to 31 U.S.C. 3717. 
E. Payment must be made in one of the following ways:   
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 

 
 
38 
Oklahoma City, OK 73169 
Payments by check or money order must be accompanied by a cover letter identifying 
Marcum LLP as a Respondent in these proceedings, and the file number of these proceedings; a 
copy of the cover letter and check or money order must be sent to Carolyn Welshhans, Associate 
Director, Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, 
Washington, DC 20549.   
 F. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
private damages action brought against Respondent by or on behalf of one or more investors based 
on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
  By the Commission. 
Vanessa A. Countryman 
        Secretary 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 97773 / June 21, 2023 

 

ACCOUNTING AND AUDITING ENFORCEMENT  

Release No. 4423 / June 21, 2023 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-21500 

 

 

In the Matter of 

MARCUM LLP 

Respondent. 

 

ORDER INSTITUTING PUBLIC 

ADMINISTRATIVE AND CEASE-AND-

DESIST PROCEEDINGS, PURSUANT TO 

SECTIONS 4C AND 21C OF THE 

SECURITIES EXCHANGE ACT OF 1934, 

AND RULE 102(e) OF THE 

COMMISSION’S RULES OF PRACTICE, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-

AND-DESIST ORDER  

 

I. 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted against Marcum LLP (“Respondent” or “Marcum”) pursuant to Sections 4C1 and 21C of 

the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 102(e)(1)(ii) of the Commission’s 

Rules of Practice. 2   

                                                 

1 Section 4C provides, in relevant part, that:   

The Commission may censure any person, or deny, temporarily or permanently, to any person the privilege of 

appearing or practicing before the Commission in any way, if that person is found … (1) not to possess the requisite 

qualifications to represent others; (2) to be lacking in character or integrity, or to have engaged in unethical or improper 

professional conduct; or (3) to have willfully violated, or willfully aided and abetted the violation of, any provision of 

the securities laws or the rules and regulations issued thereunder. 

2 Rule 102(e)(1)(ii) provides, in pertinent part, that:  

The Commission may censure a person or deny, temporarily or permanently, the privilege of 

appearing or practicing before it … to any person who is found … to have engaged in unethical 

or improper professional conduct.  



 

 2 

II. 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Public 

Administrative and Cease-and-Desist Proceedings Pursuant to Sections 4C and 21C of the 

Securities Exchange Act of 1934 and Rule 102(e) of the Commission’s Rules of Practice, Making 

Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth 

below. 

III. 

 On the basis of this Order and Respondent’s Offer, the Commission finds3 that  

A. SUMMARY 

1. This matter involves systemic quality control failures and violations of audit 

standards by Marcum from at least 2020.  The violations of Public Company Accounting Oversight 

Board (“PCAOB”) professional standards identified in this Order were primarily in connection with 

audit work for special purpose acquisition companies (“SPACs”).  However, the nature of these 

professional standard violations—including their volume and range—reflects deficiencies relevant 

to and impacting Marcum’s entire public company audit practice.  

2. Marcum’s quality control and audit standard failures permeated most stages of 

engagement work—from client acceptance to risk assessments, audit committee communications, 

audit documentation, assembly and retention of audit documentation, engagement quality reviews, 

technical consultations, due professional care, and engagement partner supervision and review.  At 

nearly every stage, Marcum lacked sufficient policies and procedures to provide reasonable 

assurance that engagements were conducted in accordance with professional standards.  Further, 

Marcum did not sufficiently monitor the effectiveness of its policies and procedures and did not 

adequately communicate those policies and procedures to engagement teams.  In sum, Marcum’s 

quality controls system failed and, as a result, certain audits were not conducted in compliance with 

PCAOB audit standards.4  

                                                 

3 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding 

on any other person or entity in this or any other proceeding. 

4 Throughout this Order, unless otherwise specified, references to “audit standards” refer to audit 

standards promulgated by the PCAOB.  



 

 3 

3. Investors rely on audit firms to serve a critical function regarding financial reporting.  

Quality controls and audit standards are necessary to maintaining this essential gatekeeping role.  As 

described, Marcum repeatedly failed to sufficiently establish key foundational policies and 

procedures, leading to multiple violations of applicable professional standards and corresponding 

misstatements to investors that Marcum audits were conducted in compliance with those standards.  

B. RESPONDENT 

4. Marcum, a New York limited liability partnership headquartered in New York, New 

York, is a public accounting firm in the United States.  As of mid-2022, Marcum had over 370 

partners and 2,300 employees, with offices in more than 30 cities.  Marcum has been registered with 

the PCAOB since October 2003.  

C. OTHER RELEVANT ENTITIY—MARCUM ASIA CPAs LLP 

5. Marcum Asia CPAs LLP (“Marcum Asia”), a New York limited liability partnership 

headquartered in New York, NY, is a public accounting firm in the United States.  Marcum Asia has 

137 accounting personnel, with offices also in China and Singapore.  Marcum Asia has been 

registered with the PCAOB since 2011, including, until September 2022, under the name Marcum 

Bernstein & Pinchuk LLP.  

6. Marcum holds a 50 percent interest in Marcum Asia, and all partners of Marcum 

have a partnership interest in Marcum Asia.  The majority of Marcum Asia partners also hold a 

partnership interest in Marcum.  Marcum has referred prospective clients, including SPAC clients, 

to the entity now known as Marcum Asia.  

7. Marcum Asia relies substantially upon Marcum for its quality control system.  

Specifically, Marcum Asia’s quality control system relies upon many of Marcum’s quality control 

policies, procedures, and monitoring systems.  Many of Marcum Asia’s quality control functions—

such as client acceptance, internal inspections, PCAOB reporting and inspections, engagement 

quality reviews, and audit documentation and binder monitoring—are managed in parallel with 

Marcum’s quality control functions, by the same personnel, partners, and management.   

D.  FACTS 

MARCUM’S SPAC PRACTICE 

8. In 2020 and 2021, over 860 SPACs completed initial public offerings (“IPOs”) in 

the United States.  Over 400 of these SPAC IPOs were audited by Marcum.  In 2019, Marcum had 

served as the auditor for only 185 public company issuers; by 2022, Marcum was responsible for 

auditing over three times that number—a total of 575 issuers, the majority of which were SPACs.  

This vaulted Marcum to the fifth largest public company auditing firm, as measured by number of 

clients.  



 

 4 

9. The strain of this exponential growth in Marcum’s public company practice exposed 

substantial, widespread, and pre-existing deficiencies in the firm’s underlying quality control 

policies, procedures, and monitoring.  In the period immediately preceding the SPAC market’s 

explosion, Marcum’s annual inspections by the PCAOB had revealed an increasing number of 

deficiencies.  Marcum was also subject to consecutive PCAOB enforcement orders—in 2019 and 

2020—related to quality control failures concerning independence and client acceptance.  

10. Starting at least in 2018 and continuing through 2021, Marcum’s own inspections 

also repeatedly revealed deficiencies, but Marcum failed to adequately remediate them.  Marcum’s 

2018 internal inspection, for example, found that 8 out of 13 public company audits inspected were 

missing documentation.  The following year, in 2019, Marcum’s internal inspection report noted: 

“there are still too many documentation misses,” including “three engagements [which] included 

work papers that were signed off after the report was issued.”  In 2020, Marcum’s internal 

inspection identified numerous documentation deficiencies, and concluded that in many instances, 

these deficiencies were caused by engagement partners, managers, and EQRs not spending enough 

time on the engagements.5  Despite repeated inspection findings, Marcum failed to take sufficient 

remediative action.  

CLIENT ACCEPTANCE AND STAFFING CAPACITY 

11. Marcum’s client acceptance process lacked sufficient quality control policies, 

procedures, and monitoring related to evaluating personnel capacity, as required by PCAOB Quality 

Control (“QC”) 20.15(a), as well as QC 20.03 and QC 20.20.  

12. Marcum’s firm policy required that any new public company client must be 

accepted by its Client Acceptance Committee.  Yet, Marcum’s client acceptance process, as 

conducted by its Client Acceptance Committee, did not evaluate the firm’s personnel capacity in 

connection with accepting new SPAC clients.  Additionally, the engagement partners responsible 

for submitting prospective new SPAC clients to the Client Acceptance Committee were also not, at 

the time of client acceptance, adequately evaluating capacity.  Engagement partners submitted 

SPAC clients for acceptance on the assumption that capacity and staffing could be managed at a 

later date, and that they would not remain obligated to serve as engagement partner.  Marcum had 

no other policies or procedures, at the time of client acceptance, that provided “reasonable 

assurance” that the firm would have sufficient personnel capacity to take on a new SPAC client or 

clients. 

13. Rather, to the extent that Marcum evaluated staffing capacity, it did so in connection 

with the logistics and scheduling of work to which it had already committed.  Throughout 2020 and 

                                                 

5 Throughout this Order, “EQR” will be used to refer to both: (1) the audit partner (the 

“engagement quality reviewer”) providing concurring approval of an audit report, and (2) the 

review procedures (an “engagement quality review”) performed by such partner in connection 

with providing his or her concurring approval.  



 

 5 

2021, Marcum continued to assume it could manage based upon some combination of triaging 

staffing and deadlines.  This assumption became more problematic, and ultimately untenable, given 

the ever-escalating volume of SPAC clients accepted by the firm.  

14. Marcum’s SPAC client acceptances increased dramatically.  In 2020, Marcum 

accepted 178 new SPAC clients.  In 2021, it accepted 633 new SPAC clients, including 159 

accepted in March 2021 alone—a substantial increase from the 8 new SPAC clients accepted just 

one year prior, in March 2020.  Each SPAC client also typically generated multiple audit 

engagements—first an IPO engagement, then an engagement in connection with periodic reporting 

obligations as a public company.  In the first three months of 2021 alone, Marcum sent out 345 new 

SPAC engagement letters.  

15. The impact these new clients and engagements had on Marcum’s SPAC client roster 

was significant.  Marcum went from a total of 113 SPAC clients in September 2020 to a total of 882 

SPAC clients in June 2021.  The figures of 113 and 882 total SPAC clients include clients to whom 

Marcum had only sent out a draft engagement letter—yet such prospective clients were never 

subsequently turned away.  Marcum also never turned away its SPAC IPO clients who, upon 

becoming effective public companies, needed additional audit services in connection with their 

periodic reporting obligations.  Notably, however, in connection with SPAC clients, fulfilling 

periodic reporting obligations—including audits and reviews in connection with Form 10-K and 

Form 10-Q filings—typically required substantially more hours, and unlike IPO engagement work, 

was subject to specific reporting deadlines, both factors which further exacerbated strains in 

Marcum’s capacity at all personnel levels.  

16. As a consequence of the exponential escalation in its SPAC clients and 

engagements, Marcum faced difficulty in staffing engagements, difficulty and delays in completing 

work within requisite deadlines, and non-compliance with numerous PCAOB audit standards.  

These difficulties were raised to firm management by Marcum personnel.  At the beginning of 

February 2021, for example, a national office partner alerted firm leadership that managers in the 

SPAC practice were “working 90+ hour weeks,” noting that “I think many, many of them are at 

their breaking point and just simply need more help and more resources.”  Nonetheless, over the 

course of February 2021, Marcum accepted a record 114 new SPAC clients.  At the beginning of 

March 2021, the partner again advised firm leadership, noting the “disconnect between how the 

practice is running and what we are putting in place to make sure we’re in compliance with 

professional standards” and highlighting concerns that Marcum was “setting ourselves up to fail at 

our own policies.”  Nonetheless, Marcum accepted another 159 new SPAC clients in March 2021.  

17. During 2020 and 2021, Marcum repeatedly had difficulty obtaining staffing at all 

levels.  Additionally, as staffing became more constrained, managers and engagement partners were 

assigned later in the engagement process, rather than immediately upon receipt of a client-signed 

engagement letter.  Staffing of engagement quality reviews (“EQRs”) became especially difficult.  

In particular, in early 2021, a substantial portion (20%) of engagement quality reviews were 

reallocated—by firm leadership—to public company audit partners who did not typically perform 

engagement quality reviews.  



 

 6 

18. One area in which delays and the failure to satisfy audit standards was particularly 

acute was in the timely completion, assembly, and retention of audit documentation.  Between 

October 2020 and early June 2021, the number of work paper binders that were not finalized and 

assembled for retention within the PCAOB-required 45-day period (measured from report release 

date) increased from 23 to 687.  Marcum personnel repeatedly attributed these delinquencies, and 

the growth in delinquencies, to the overall volume of engagements and lack of personnel capacity.  

In particular, memos drafted by manager and staff-level personnel in connection with delinquent 

binder archiving repeatedly attributed the delinquencies to “time constraints associated with the 

volume of SPACs”; such language was used in connection with engagements dating back to July 

2020, and continued to be cited in memos through August 2021.  

19. The difficulties in staffing and delays in completing work within requisite deadlines, 

as well as non-compliance with PCAOB audit standards, reflect that Marcum could not have 

reasonably expected to complete all accepted SPAC engagements in accordance with professional 

standards.  

CLIENT ACCEPTANCE AND MANAGEMENT INTEGRITY 

20. Marcum’s client acceptance process lacked sufficient quality control policies, 

procedures, and monitoring to evaluate the management integrity of prospective clients, including 

insufficient documentation and communication of such policies and procedures, as required by QC 

20.14, as well as QC 20.03, QC 20.20, QC 20.23, and QC 20.24. 

21. Marcum’s firm policy provided that, prior to the acceptance of any new public 

company client, Marcum must obtain and review background reports on any key personnel, 

including the company’s CEO, CFO, and Audit Committee Chair.  This policy required that the 

background reports were included among the materials sent to the Client Acceptance Committee for 

its review.  The Client Acceptance Committee reviewed such reports in connection with its 

acceptance decisions. 

22. For prospective SPAC clients, however, Marcum deviated from its policy and did 

not require receipt and review of background reports prior to client acceptance.  Instead, Marcum 

required only that relevant client personnel submit a form authorizing a background check, and the 

form relied upon client personnel to self-disclose relevant facts.  Marcum personnel relied on that 

form completed by their clients and also conducted cursory internet searches related to the relevant 

client personnel.  The completed background reports were required to be received and reviewed 

prior to the effective date of the SPAC’s IPO. 

23. Marcum’s SPAC-specific background report “policy” was not memorialized in any 

relevant policy document or form; internal communications reflect that the lack of any written 

policy may have resulted in this policy and corresponding procedures not being sufficiently 

understood and consistently applied across the SPAC practice.  



 

 7 

24. Marcum’s SPAC-specific “policy” also lacked guidance regarding how requisite 

internet searches were to be conducted.  As a result, searches conducted relied upon protocols that 

may have been insufficient to provide relevant information.  

25. Marcum relied solely on engagement teams for compliance with the requirement 

that background reports were received and reviewed prior to IPO effectiveness.  This was a contrast 

to the firm-wide procedure, in which the Client Acceptance Committee would both ensure reports 

were received prior to client acceptance, and substantively review the reports.  

26. Marcum also had insufficient monitoring of compliance with the SPAC-specific 

“policy.”  As early as August 2020 and through the fall of 2021, multiple SPAC managers and both 

Client Acceptance Committee co-chairs voiced the need for additional resources and processes to 

monitor the timely receipt of background reports.  Sufficient additional resources and processes, 

however, were not provided.  

27. The weakness of Marcum’s process was reflected in a one-time monitoring exercise, 

conducted in July 2021, which revealed that a substantial portion of SPAC work paper binders did 

not include documentation of one or more required background reports.  This monitoring exercise 

found that, among SPAC clients that had completed the IPO process, over one-third were missing 

reports required under Marcum’s SPAC-specific policy.   

AUDIT DOCUMENTATION 

28. In documenting engagement work, Marcum lacked sufficient policies, procedures, 

and monitoring to provide reasonable assurance that audit documentation reflected when procedures 

were performed, the date work was completed, and the date of relevant reviews, as well as reflected 

that audit procedures were completed and sufficient evidence obtained prior to the release of the 

respective audit report, as required by QC 20.03, QC 20.17, and QC 20.20.  In particular, Marcum 

lacked sufficient policies, procedures, and monitoring related to work paper sign offs, including the 

timing and dating thereof, as well as related to the timely assembly and retention of audit 

documentation, resulting in numerous engagements in violation of the underlying audit standard, 

AS 1215, within the SPAC practice and throughout the firm.  Marcum also lacked sufficient 

policies, procedures, and monitoring related to the assembly and retention of audit documentation, 

including in connection with policies related to email retention, as well as sufficient policies, 

procedures, and monitoring related to audit documentation added subsequent to AS 1215.15’s 45-

day documentation completion date (as specified in AS 1215.16), as required by QC 20.03, QC 

20.17, QC 20.20, QC 20.23, and QC 20.24.  

Work Paper Sign Offs  

29. Marcum lacked sufficient policies, procedures, and monitoring related to work paper 

sign offs, including the timing thereof, resulting in widespread violations of the underlying audit 

standard, AS 1215, based on Marcum engagement partners, EQRs, managers, and staff-level 



 

 8 

personnel performing work paper sign offs only subsequent to the release of audit reports and other 

issuances.  

30. Prior to the release of an audit report, Marcum’s firm policy required engagement 

managers, engagement partners, and EQRs to sign off on a “routing slip” work paper, which 

represented that all requisite reviews had been performed.  EQRs were also required, prior to the 

release of an audit report, to sign off on an “EQR memo” work paper, which provided information 

regarding the EQR’s review procedures.  Marcum policy also required sign off on certain other 

work papers, but did not require that such work paper sign offs be conducted prior to the report 

release date; Marcum required only that these sign offs were done prior to the documentation 

completion date prescribed by AS 1215.15 (45 days from report release date).   

31. Marcum’s written policies failed to address explicit requirements of AS 1215.06(b), 

including that audit documentation reflect “the date such work was completed” and “the date of 

such review.”  

32. In early 2021, Marcum conducted post-issuance inspections of its SPAC IPO work 

paper binders (the “Post-Issuance IPO Review”).  These inspections, conducted between one and 

three days after the relevant audit report was released, revealed that approximately three-fourths of 

work paper binders contained one or more work papers lacking both “preparer” and “reviewer” sign 

offs.  These same inspections revealed that many work papers required to be signed off on by 

engagement partners and EQRs—required per Marcum’s own policy—were not yet signed off on; 

depending upon the work paper, across these inspections, the percentage of missing sign offs 

identified ranged from at least 10% to as high as 50%.  

33. Also in early 2021, Marcum conducted a post-issuance inspection of 25 SPAC IPO 

audits whose work papers binders had already been archived.  Of these 25 binders, only 8 were in 

compliance with Marcum’s documentation and sign off policies.  

34. Additionally, a sampling review of 28 SPAC audit binders conducted by SEC staff 

in the Division of Enforcement (the “SEC Review”) revealed that over 25% of Marcum-required 

engagement partner sign offs were either conducted post-issuance or entirely missing.  Among 

Marcum-required EQR sign offs, approximately one-third were either conducted post-issuance or 

entirely missing.  The SEC Review revealed post-issuance and/or missing sign offs in every one of 

28 SPAC audit binders reviewed.  The SEC Review also revealed that many post-issuance sign offs 

were conducted only in connection with binder assembly and retention (or “archiving”) procedures, 

frequently conducted at or around 45 days post-issuance, if not later.  Indeed, among the audit 

binders reviewed, half were archived outside of AS 1215.15’s 45-day “documentation completion 

date,” and contained sign offs by the engagement partners and EQRs that were executed post-45 

days.  The SEC Review, and in particular the time-stamps associated with the sign offs, also 

revealed that sign offs were frequently conducted in quick succession.  Similar findings were 

observed outside the SPAC practice.  

“Routing Slips” 



 

 9 

35. Marcum lacked sufficient policies, procedures, and monitoring related to sign offs 

on its “routing slip” work paper, including the timing and dating thereof.  Marcum engagement 

partners, EQRs, and managers engaged in widespread violations of the underlying audit standard, 

AS 1215, including signing routing slips only subsequent to the release of audit reports and other 

issuances, often also signing routing slips using only manually input date entries.  

36. Although Marcum purported to require that its “routing slips” were signed pre-

issuance, at Marcum there was a long-standing and known practice of post-issuance routing slip 

sign offs.  This included routing slips signed weeks or even 45 or more days post-issuance.  In 2020 

and through mid-2021, within the SPAC practice, up to 50% of routing slips were not fully signed 

prior to issuance.   

37. Marcum’s routing slip sign offs were also frequently conducted manually, and 

signed with dates that did not reflect the actual date on which Marcum personnel conducted their 

sign offs.  While firm management was aware that routing slips were often signed post-issuance, 

firm policy nonetheless explicitly allowed the use of manual signatures—with only manually input 

date entries—that often had the effect of obscuring the actual date upon which routing slips were 

signed by Marcum personnel.   

38. A sampling review of SPAC routing slips conducted by SEC staff in the Division of 

Enforcement reflected this practice in connection with approximately 20% to 50% of routing slips.  

In these instances, the manually input date on the routing slip’s signature line corresponded to the 

date the audit report was released, and pre-dated the date upon which Marcum personnel actually 

signed the routing slip.   

39. By contrast, some Marcum personnel, although signing only after the audit report’s 

release, signed with an electronic, time-stamped signature.  Marcum policy at the time, however, did 

not require personnel use an electronic time stamp signature.  

40. In 2021, Marcum implemented an electronic routing slip system.  While this system 

removed the ability to manually input sign off dates, Marcum continued to lack sufficient policies, 

procedures, and monitoring related to routing slips.  Marcum did not amend its formal policy 

documents regarding the timing and documentation of routing slip sign offs; while Marcum 

management sent an email announcing a policy revision, its 2017 policy on “routing slips” was not 

revised, and remained posted on Marcum’s intranet.  Additionally, the timeliness of sign offs 

remained not subject to sufficient monitoring protocols.  

Audit Documentation Assembly and Retention (Archiving) 

41. Marcum lacked sufficient policies, procedures, and monitoring related to the 

assembly and retention (also referred to as “archiving”) of audit documentation, including its 

routing slip policies and procedures, its email retention policies and procedures, and policies and 

procedures related to assembly and retention of audit documentation in connection with departed 

personnel.  



 

 10 

42. Marcum’s procedures for ensuring compliance with assembly and retention 

requirements—including that audit documentation was identified for retention, archived, and 

archived timely—were based on its routing slips.  Marcum logged each routing slip, and used such 

logs to monitor the timely assembly and retention of work paper binders.  Therefore, to the extent 

that a routing slip was not yet generated, Marcum was not yet monitoring whether the related audit 

documentation was being assembled and retained—meaning Marcum could not have reasonable 

assurance that audit documentation was being archived for retention, on a timely basis or at all.  No 

routing slip was generated, however, until engagement team personnel requested a routing slip.  

43. Within Marcum’s SPAC practice in 2020 and 2021, in many instances, not only was 

a routing slip not fully signed off prior to issuance—at times, no routing slip record had been 

generated at all.  Instead, the routing slip record was not generated until weeks or months after the 

release of the audit report or other issuance.  Internal communications in January through August of 

2021—including communications to Marcum’s firm management—reflect that routing slip records 

were missing for issuances dating back as many as nine months prior.  These routing slips were 

missing because engagement team personnel failed to request a routing slip.  

44. Marcum’s procedures for ensuring compliance with assembly and retention 

requirements also failed to monitor the assembly and retention of documentation created in 

connection with engagements for which no report or other issuance was ultimately released.  

Marcum’s procedures were based on monitoring routing slips, yet routing slips were typically not 

generated prior to the day a report or issuance was to be released.   

45. Within Marcum’s SPAC practice, engagement teams often performed work in 

connection with reports or other issuances that were not ultimately released, including when clients 

chose to withdraw a registration statement.  The fact that not all SPAC clients would complete the 

IPO process was a known and foreseeable fact in the industry, yet Marcum, despite its substantial 

volume of SPAC clients, failed to adopt policies, procedures, and monitoring sufficient to provide 

reasonable assurance that such audit documentation was assembled and retained in a timely fashion, 

or at all.  Marcum did not archive numerous work paper binders, despite the work papers reflecting 

that months had passed since any procedures and work had been performed on the engagement; 

among such binders, many lacked any indication that a routing slip had ever been generated.  

46. Email “Auto Delete” Policy.  Marcum’s policies and procedures were additionally 

insufficient to provide reasonable assurance that audit documentation for SPAC engagements was 

appropriately and timely retained and archived due to its email “auto delete” policy.  At Marcum, 

audit documentation was frequently not saved into the engagement binder software until archiving 

procedures were conducted.  In the interim, documentation was frequently maintained only within 

engagement team members’ email communications.  In 2021, Marcum did not archive a notable 

number of work paper binders—SPAC binders in particular—until six months or more following 

the date of the report or other issuance.  Notwithstanding such facts, in March 2021, Marcum 



 

 11 

implemented a six-month “auto delete” policy on email communications for the SPAC practice.6  

Given the facts and circumstances, Marcum’s implementation of a six-month email “auto delete” 

policy failed to provide reasonable assurance that audit documentation would be appropriately and 

timely archived for retention. 

47. Assembly and Retention of Audit Documentation in Connection with Departed 

Personnel.  At Marcum, numerous work paper binders were not archived prior to the departure of 

relevant engagement team personnel.  Not infrequently, such binders were not archived timely, but 

lingered on “delinquency lists” for several months.  Internal communications also reflect instances 

in which, upon initiation of archiving procedures, there were difficulties in locating audit 

documentation due to the personnel’s departure.  

Timeliness of Audit Documentation Assembly and Retention (Archiving)  

48. Marcum also lacked sufficient policies, procedures, and monitoring related to the 

timely assembly and retention of audit documentation, resulting in widespread violation of the 

underlying audit standard, AS 1215, particularly within the SPAC practice.  

49. Particularly within the SPAC practice, Marcum frequently did not assemble a 

complete and final set of audit documentation for retention within the 45 days after the report 

release date, as required by AS 1215.15.  As of early June 2021, Marcum had at least 687 SPAC 

work paper binders that were past the 45 day documentation completion date, and yet not archived.  

In total, between late 2020 and over 2021, at least 1,800 of Marcum’s SPAC work paper binders 

were delinquently archived, representing as much as 50% of SPAC work paper binders within this 

time period.  

Audit Documentation Added Following the 45-Day Documentation Completion Date  

50. Marcum lacked sufficient policies, procedures, and monitoring related to compliance 

with AS 1215.16, as well as sufficient documentation and communication of such policies.  AS 

1215.16 requires that no audit documentation is deleted or discarded after the “documentation 

completion date,” set at 45 day following the audit report release date.  Yet, Marcum failed to 

sufficiently document or communicate this requirement in a manner that would have provided 

reasonable assurance that the policy would be understood and complied with.  For example, the 

relevant section of one policy manual failed to state this requirement at all.   

51. AS 1215.16 also requires that the addition of any documentation subsequent to the 

45-day documentation completion date is explicitly documented, including documenting “the date 

the information was added, the name of the person who prepared the additional documentation, and 

the reason for adding it.”  Yet, Marcum did not sufficiently document or communicate this 

requirement in a manner that would have provided reasonable assurance that the policy would be 

                                                 

6 Approximately two months later, following the initiation of Staff’s investigation, this policy 

was suspended.   



 

 12 

understood and complied with.  For example, one policy manual limited this requirement to those 

alterations that were “substantive,” which limitation is not contained in the audit standard, and not 

defined within Marcum’s policies.  Another policy manual did state a memorandum was required to 

document any additions made to audit documentation, but the policy was unclear as to its 

application.  

52. Marcum’s internal email communications reflect that Marcum did require a 

memorandum in connection with all delinquently archived binders, and that Marcum did require 

that such memoranda were signed by both the engagement partner and the EQR.  Yet, Marcum 

failed to sufficiently document these requirements in a written policy statement—such as a 

statement in an official policy manual—or otherwise communicate such requirements in a manner 

that would have provided reasonable assurance that the policy would be understood and complied 

with.  

53. Marcum’s failure to sufficiently document and communicate its policy led to 

practice inconsistency regarding the use of a memorandum in connection with delinquently archived 

binders.  The SEC Review also indicated that engagement partners did not sign off on such memos 

approximately 20% of the time, and EQRs did not sign off over 40% of the time.  

ENGAGEMENT QUALITY REVIEW 

54. In connection with engagement quality reviews, Marcum lacked sufficient policies, 

procedures, and monitoring related to the documentation of engagement quality reviews, as well as 

related to the objectivity of such reviews, as required by QC 20.03, QC 20.17, and QC 20.20.  This 

resulted in numerous engagements in violation of the underlying audit standard, AS 1220, which, 

among other things, requires that the EQR sufficiently document his or her review, including 

documents reviewed and the date he or she provided concurring approval of the issuance (AS 

1220.19), and requires that the EQR remain objective and not assume engagement team 

responsibilities (AS 1220.07).  

EQR Documentation  

55. At Marcum, engagement quality review procedures were documented via sign offs 

on routing slips, EQR memos, and sign offs on individual work papers in the engagement software.  

56. Work Paper Sign Offs.  The SEC Review revealed that approximately 33% of 

Marcum’s EQR sign offs—as limited to those work papers that explicitly required sign offs, per 

Marcum policy—were either signed post-issuance, or were missing.  Similar figures were found in 

Marcum’s Post-Issuance IPO Review.  Separately, in connection with quarterly reviews, Marcum 

EQRs often did not sign off on any work papers in the engagement software.  A sampling review, 

by SEC staff in the Division of Enforcement, of 15 quarterly review binders revealed that three of 

the 15 review binders contained no EQR sign offs, at all, on individual work papers via the 

engagement software.   



 

 13 

57. Routing Slips.  At Marcum, routing slips purported to serve as documentation of the 

EQR’s concurring approval, and the date of such approval.  Yet, Marcum had a widespread practice 

of post-issuance sign offs on routing slips, including by EQRs.  In half of 28 audit binders sampled 

in the SEC Review, the EQR signed the routing slip post-issuance.  Such post-issuance sign offs 

failed to serve as an effective control to ensure that review procedures were completed and 

concurring approval obtained prior to issuance.  Such post-issuance sign offs also failed to 

document the completion of review procedures and concurring approval prior to issuance.  

58. EQR Memos.  At Marcum, EQR memos purported to serve as documentation of the 

EQR’s review procedures.  Similar to routing slips, Marcum also had a widespread practice of post-

issuance sign offs on EQR memos.  Marcum’s Post-Issuance IPO Review revealed that, as of one to 

three days following issuance, over half of work paper binders did not contain a signed EQR memo.  

The SEC Review reflected similar findings.  Moreover, delays in EQR memo sign offs typically ran 

in parallel with delays in routing slip sign offs; frequently, the two documents were signed off by 

the EQR in parallel—and both signed off post-issuance.  Indeed, the SEC Review found that in 13 

of 28 sampled audit binders, the EQR signed off post-issuance on both the routing slip and the EQR 

memo.  In such instances, neither the routing slip nor the EQR memo served as an effective control 

or sufficient documentation.  EQR memos were also typically signed only manually, and there are 

indications such sign offs were also signed with only manually-input dates that did not reflect the 

actual date on which the Marcum EQR signed the EQR memo. 

59. The above-noted deficiencies occurred against a backdrop in which Marcum was 

already on notice, for several years running, that the engagement quality review process was under 

stress.  This included repeated Marcum internal inspection findings flagging concerns that EQRs 

were not provided sufficient time to conduct their review procedures and that engagement teams 

were over-reliant on EQRs to catch deficiencies and documentation issues.  

EQR Objectivity   

60. While Marcum EQRs often conducted required sign offs only post-issuance, at the 

same time, in many instances, EQRs conducted their sign offs prior to relevant engagement partner 

sign offs.  The SEC Review revealed that at least 10% of EQR sign offs were conducted prior to the 

engagement partner signing off on the same work paper.  Additionally, with the institution, in early 

2021, of Marcum’s Post-Issuance IPO Review, internal communications repeatedly reflected that 

EQRs were asked to sign off on work papers, notwithstanding circumstances in which such work 

papers included open review notes or lacked engagement team sign offs.  In certain instances, 

engagement partners appeared to encourage such practices, including in a training presentation in 

which it was stated that due to SPAC’s tight timelines, Marcum could not “wait to put everything 

through a serial process,” and should instead conduct contemporaneous reviews.  

61. In other instances, the Marcum EQR refrained from signing off on work papers 

before the engagement partner, but provided direct guidance and feedback to the engagement 

manager—prior to engagement partner review.  This included, for example, an instance in which 

such guidance was provided prior to the engagement partner being assigned to the engagement.  



 

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DOCUMENTATION OF WARRANT ACCOUNTING PROCEDURES 

62. Among Marcum’s SPAC clients, virtually all issued warrants.  In connection with 

warrant accounting procedures, however, Marcum lacked sufficient policies, procedures, and 

monitoring to provide reasonable assurance that the work performed by the firm’s personnel with 

respect to the documentation of warrant accounting procedures would meet the requirements of the 

underlying audit standard, AS 1215, as required by QC 20.03, QC 20.17, and QC 20.20.  This 

resulted in numerous engagements in violation of AS 1215.  

63. Marcum’s memoranda documenting its warrant accounting procedures were 

consistently insufficient.  These internally prepared memos were not dated, did not reference the 

memo’s author, and did not reference the client’s name.  Such memos contained no citations or 

cross-references to the individual client’s warrant agreement or features.  Across clients, the 

language utilized and specific description of terms was virtually identical from memo to memo, and 

unchanged from the memo template, making it difficult to identify what procedures Marcum 

actually performed, including whether the underlying agreement was reviewed—in sufficient detail, 

or at all.  Notably, the template upon which such memos were based provided for only one 

accounting conclusion (equity treatment), and provided no guidance regarding any potential 

alternate conclusions, and no direction regarding potentially relevant client-specific information to 

analyze and correspondingly reference and detail in adapting the template memo.  

64. Marcum also received and purportedly reviewed client-prepared memoranda 

analyzing the proper accounting treatment for the client’s warrants.  Marcum’s documentation of its 

warrant accounting procedures in connection with client warrant accounting memos, however, was 

also consistently insufficient.  In almost all instances reviewed, the only comment by Marcum on 

the client memo was a summary comment at top, stating the date Marcum received the memo and 

the fact of Marcum’s review.  The lack of substantive auditor notations and comments make it 

difficult to identify what procedures Marcum actually performed in connection with its evaluation 

of the memo and the client’s accounting conclusion.  

65. Warrant accounting related work papers were also not consistently signed off on by 

either the engagement partner or EQR.  The SEC Review found that, among 28 audit binders 

sampled, over 60% had no EQR sign off on Marcum’s warrant accounting memo; engagement 

partners failed to sign off pre-issuance nearly 30% of the time.  Sign offs on the client-prepared 

warrant accounting memos were similar.  

66. Marcum’s annual internal inspection, conducted in the summer of 2021, revealed 

similar findings regarding insufficient documentation of warrant accounting procedures.  Among 38 

SPAC engagements inspected, 32 were required to be re-opened to add appropriate documentation, 

including, primarily, documentation related to warrant analysis and/or warrant valuation.  Inspector 

comments in connection with the internal inspection also frequently reflected that no evidence of 

warrant accounting procedures had been documented in relevant work papers.   

COMMUNICATIONS WITH AUDIT COMMITTEES 



 

 15 

67. In connection with audit committee communications, Marcum lacked sufficient 

policies, procedures, and monitoring related to compliance with the underlying audit standard, AS  

1301, as required by QC 20.03, QC 20.17, and QC 20.20.  This resulted in numerous engagements 

in violation of this audit standard, including based upon insufficient communication of changes in 

significant risks to the audit committee, and the failure to sufficiently and accurately document the 

fact, timing, and method of audit committee communications.  

Timing and Mode of Audit Committee Communications  

68. Marcum’s work papers for many engagements reflected insufficient audit 

documentation related to the timing and/or the mode of communications with audit committees.  

This included instances in which the only documentation of relevant communications consisted of 

unsigned letters, including instances in which such letters still contained “track changes.”  

69. Marcum’s annual internal inspection, conducted in the summer of 2021, also 

revealed repeated instances in which there was insufficient documentation of audit committee 

communications.  This included findings that 9 out of 38 SPAC engagements examined did not 

contain the final audit committee letter in the relevant binder.  

70. Within Marcum’s SPAC practice, there was a common practice of oral, rather than 

written, audit committee communications.  Marcum’s policies did not sufficiently address the need 

to document the fact and timing of oral communications; Marcum also lacked sufficient procedures 

and monitoring to ensure that such oral communications were sufficiently documented. 

Substance of Audit Committee Communications  

71. Marcum’s annual internal inspection also revealed repeated instances in which 

Marcum’s communications to the audit committee failed to include newly identified significant 

risks—5 out of 38 engagements examined—in violation of AS 1301.11.  Marcum’s policies, 

procedures, and monitoring were insufficient to provide reasonable assurance that all requisite 

matters would be communicated to an issuer’s audit committee.  Notably, Marcum had already been 

made aware, in connection with the PCAOB’s 2019 inspection, that half of audits examined did not 

comply with the relevant audit standard.  

RISK ASSESSMENTS 

72. In connection with its performance of risk assessment procedures, Marcum lacked 

sufficient policies, procedures, and monitoring related to compliance with the underlying audit 

standard, AS 2110, as required by QC 20.03, QC 20.17, and QC 20.20.  This resulted in numerous 

SPAC engagements in violation of this audit standard, including based upon the failure to conduct 

risk assessments at the assertion level, and the failure to identify all relevant significant risks.  



 

 16 

Assertion Level Risk Assessments  

73. Marcum’s SPAC practice failed to conduct risk assessments at the assertion level.  A 

review of nearly 80 SPAC audits conducted by SEC staff did not reveal a single instance, prior to 

2022, in which a SPAC audit included an assertion level risk assessment.   While Marcum did have 

a template work paper, called a “Risk Assessment Summary Form,” which outlined procedures 

including assertion level risk assessments, such work paper was never used in these SPAC 

engagements—despite the work paper being listed as a required sign off, for engagement partners 

and EQRs, in the relevant completion checklist.  

Identification of All Significant Risks  

74. Marcum’s SPAC practice also consistently failed to identify all relevant significant 

risks.  Prior to March 2020, Marcum’s planning meeting memos did not explicitly identify any 

significant risks, and most memos contained no reference to the significant risk of management 

override of controls.  Among memos dated between March 2020 and April 2021, virtually all 

memos identified only management override of controls as a significant risk, and up to 10% did not 

identify any significant risks.  It was within this time period that Marcum introduced a SPAC-

specific planning memo template, which identified management override—and only management 

override—as a significant risk.  

75. Marcum appears to have identified potential SPAC risks such as complex financial 

instruments, related party transactions, and contingent fees only rarely, and only starting in mid-

2021.  The identification of significant risks also did not appear correlated to the SPAC’s lifecycle 

stage.  Instead, the SPAC practice’s identification of significant risks correlated directly to the time 

period in which the memo was drafted, rather than the circumstances of individual clients.  

76. Marcum’s failure to conduct adequate risk assessments and sufficiently identify all 

significant risks is also illustrated by its planning meeting practices.  Several of Marcum’s SPAC 

engagement partners also followed a practice of conducting joint planning meetings, in which one 

planning meeting was held to discuss up to 27 separate SPAC clients, documented in one joint 

memo, whose discussion of significant risks was a single paragraph section designed to apply to all 

clients.   

TECHNICAL CONSULTATIONS 

77. In connection with technical consultations, also internally referred to as “national 

office” consultations, Marcum lacked sufficient policies, procedures, and monitoring to provide 

reasonable assurance that personnel obtained requisite and appropriate technical consultations, as 

required by QC 20.19, as well as QC 20.03, QC 20.17, and QC 20.20. 



 

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Obtaining Consultations When Appropriate  

78. Marcum lacked sufficient policies, procedures, and monitoring to provide reasonable 

assurance that personnel obtained consultations when appropriate.   

79. Marcum’s written policies on technical consultations provided insufficient and 

inconsistent guidance regarding when a consultation should, or must, be obtained.  In February 

2021, Marcum released a written policy on technical consultations that listed certain “required 

consultations.”  Yet, Marcum’s policy manual’s statement on technical consultations continued to 

contain no indication regarding when consultations were required.  

80. Moreover, prior to February 2021, Marcum had no policy explicitly indicating the 

circumstances under which technical consultations were required, noting only in its policy manual a 

handful of high-level scenarios that “might require consultation.”  

81. Outside of its written policies, Marcum lacked sufficient guidance regarding 

consultations; the decision to obtain a consultation was therefore left almost entirely to the 

engagement teams and their assigned engagement quality reviewers to determine.  Marcum also 

lacked any firm-wide procedures to track or monitor the request for, or occurrence of, technical 

consultations.  

82. Among the consultations explicitly required by Marcum’s policy were consultations 

in the event of any restatement.  Over the course of 2021, Marcum SPAC clients issued hundreds of 

restated financials, including restatements related to the accounting for warrants.  Yet, Marcum’s 

engagement teams did not request and receive a restatement consultation in connection with most 

SPAC restatements. 

Consultant Selection  

83. Marcum lacked sufficient policies, procedures, and monitoring to provide reasonable 

assurance that individuals consulted had appropriate levels of knowledge, competence, judgment, 

and authority.  Marcum had insufficient policies or procedures regarding consultant selection; while 

a listing of “subject matter experts” was made available on the firm’s intranet, the firm was not 

otherwise involved in an engagement team’s selection of any individual consultant.  Nor was the 

firm monitoring consultant selections, such that it could monitor whether individual consultants 

were appropriately qualified to consult in connection with specific engagements.  Consequently, 

Marcum could also not effectively monitor whether it had a sufficient number of appropriately 

qualified experts, including on a subject-matter specific basis.  

Consultation Quality  

84. Marcum lacked sufficient policies, procedures, and monitoring to provide reasonable 

assurance regarding consultation quality, including consultation procedures and documentation.  

Marcum had no firm-wide policies regarding how to request a consultation, or how to conduct 

consultation procedures.  There are indications this lack of formalities may have resulted in 



 

 18 

miscommunications regarding the performance of technical consultations; for example, in at least 

one instance, an engagement partner believed she had obtained a consultation, while the 

“consultant” did not understand himself to have provided one.  

85. Marcum’s policy manual stated that “unusual, controversial,” “complex,” and 

“material” consultations should be documented, but there was no further guidance, including what 

form such documentation should take.  To the extent consultations were documented, many appear 

to have been documented in a cursory fashion. 

86. Additionally, Marcum was not monitoring consultation quality, including the 

sufficiency or appropriateness of consultation procedures and documentation.  

ENGAGEMENT PARTNER SUPERVISION AND REVIEW 

87. In connection with engagement partner supervision and review, Marcum lacked 

sufficient policies and procedures related to compliance with the underlying audit standard, AS 

1201, as required by QC 20.03 and QC 20.17.  This resulted in numerous engagements in violation 

of this audit standard.  

88. Within Marcum’s SPAC practice, insufficient partner supervision and review 

extended across many stages of engagement work.  Engagement partners frequently failed to 

sufficiently supervise and review engagement work in connection with each of the processes 

discussed above, including: 

89. Client acceptance, including adequate personnel capacity and client timing 

expectations. 

90. Client acceptance and management integrity, including timely receipt and review 

of background reports from all relevant parties.  

91. Audit documentation, including timely work paper sign offs and compliance with 

AS 1215. 

92. Engagement quality review (EQR), including documentation of review and 

concurring approval and compliance with AS 1220.  

93. Documentation of warrant accounting procedures and compliance with AS 1215.  

94. Audit committee communications, including timely communications with all 

requisite disclosures, and sufficient documentation of such communications in audit work papers, in 

compliance with AS 1301.  

95. Risk assessments, including conducting procedures at the assertion level and 

identifying all significant risks, in compliance with AS 2110.  



 

 19 

96. In addition to the processes discussed above, Marcum partners also frequently failed 

to sufficiently supervise engagement work in connection with client intake and planning, and 

frequently failed to provide sufficient supervision and review of staff-level work.  

97. Client intake and planning.  Marcum’s engagement partners frequently failed to 

sufficiently supervise client intake and initial planning.  There was typically no initial conversation 

walking the client through the information and documents Marcum needed, resulting in the frequent 

receipt of late and incomplete information from clients.  

98. Oversight of staff-level work.  Marcum’s engagement partners frequently failed to 

sufficiently supervise engagement work conducted by staff-level personnel.  At the time staff-level 

work was conducted, Marcum often had not yet assigned an engagement manager, and there was 

often no contemporaneous supervision by the engagement partner.  Over time, with increased 

workload, Marcum increasingly assigned engagement managers later in the audit process.  The 

impact was that Marcum often had insufficient contemporaneous oversight of staff-level work.  This 

resulted in staff-level work quality that was repeatedly found substantially lacking, including work 

papers reflecting no work done at all, or work papers referencing erroneous or outdated information. 

99. Marcum’s system of quality control was not sufficient to provide reasonable 

assurance that supervision and review of audit work performed by engagement partners would be 

compliant with AS 1201. 

DUE PROFESSIONAL CARE 

100. As a result of the conduct described above, Marcum partners frequently failed to 

exercise due professional care in carrying out SPAC engagement work, in violation of AS 1015.   

101. Marcum’s system of quality control was not sufficient to provide reasonable 

assurance that SPAC engagement work would meet the requirements of AS 1015, as required by 

QC 20.03 and QC 20.17.  

TRAINING, DOCUMENTATION, AND COMMUNICATION OF POLICIES AND 

PROCEDURES, AND EVALUATION OF SUFFICIENCY OF TRAINING, PRACTICE 

AIDS, AND GUIDANCE 

102. Marcum’s evaluation and monitoring of its internal trainings related to SPAC 

engagements, and personnel compliance with firm-mandated training requirements, was 

insufficient, as required by QC 20.13 and QC 20.20.  There was also insufficient documentation and 

communication of SPAC policies and procedures, as required by QC 20.23 and QC 20.24.  

Relatedly, Marcum’s evaluation of the appropriateness of its training, guidance materials, and 

practice aids—which could serve to document and communicate such requirements—was also 

insufficient, as required by QC 20.20.  Marcum’s failure to adequately document and communicate 

policies and procedures related not only to SPAC-specific requirements, but also policies and 

procedures relevant to the firm’s public company practice generally.  



 

 20 

103. The composition and size of Marcum’s SPAC practice changed dramatically 

between mid-2020 and mid-2021.  As late as September 2020, two engagement partners conducted 

virtually all SPAC IPO audit work.  Working alongside them were only nine managers, with two 

managers responsible for over half of such engagements.  Beginning in late 2020, dozens of 

Marcum partners, managers and staff who did not have previous SPAC experience were brought in 

to assist on engagements.  By mid-2021, at least 43 engagement partners and 75 managers were 

staffed on SPAC engagements.  Staff level personnel increased from 30 in mid-2020 to 80 by 2022.  

104. The influx of new personnel into Marcum’s SPAC practice—including many 

personnel who worked on only a handful of SPACs—elevated the importance of training activities, 

elevated the importance of formalizing and memorializing relevant policies and practices, and 

elevated the importance of evaluating and monitoring the sufficiency of relevance practice aids and 

guidance.  

105. Instead, the influx of new personnel exposed pre-existing deficiencies in Marcum’s 

practices related to training, documentation, and communication of policies and procedures.  While 

some of these deficiencies might have been partially ameliorated by sufficient partner supervision 

and review, based upon the conduct discussed above, Marcum lacked sufficient guidance, 

supervision, and review at the engagement partner level as well.  

Training  

106. Marcum conducted a training related to SPAC engagements, and purported to make 

the training mandatory for any manager or partner-level personnel, prior to conducting any SPAC 

engagement work.  Many SPAC planning memos also explicitly promised to assign to the 

engagement staff with “adequate SPAC industry experience” as a necessary step to address 

significant risks.  Marcum deemed attendance at its SPAC training sufficient to meet the “adequate 

SPAC industry experience” requirement.   

107. Yet, Marcum did not sufficiently monitor and enforce training attendance, and 

numerous personnel appear to have conducted SPAC engagement work prior to attending the 

relevant training.  

108. Marcum’s SPAC training also did not sufficiently address all relevant SPAC policies 

and procedures. 

Communication and Documentation of Policies and Procedures, and Evaluation of Practice Aids 

and Guidance 

109. Marcum did not memorialize its SPAC policies and procedures in any consistent 

fashion or centralized location.  In certain instances, Marcum’s SPAC practice appeared to deviate 

from standard documentation requirements without memorializing such practice deviations in any 

formal policy.  In lieu of any formal policy or centralized guidance document, the SPAC practice21 

typically relied upon email communications, which piecemeal guidance was not centralized and 

evolved over time.  

110. Marcum’s failure to memorialize relevant requirements in a consistent fashion and 

centralized location contributed to many of the audit standard and quality control violations 

described above and below. 

111. For example, internal communications among Marcum’s SPAC practice personnel 

repeatedly reflected questions and confusion regarding relevant policies and procedures, including 

on the part of national office personnel and other partners.  Some communications reflected that 

Marcum personnel did not know whether certain documentation was required, or how to comply 

with requirements.  Other communications reflected that personnel were not aware of sign off 

requirements.  In certain instances, communications reflected that personnel were not aware of 

which audit program or completion checklist to use, whether there even was an underlying audit 

program or completion checklist, or where or how to find such guidance.  Many questions raised 

could not be answered without explicit discussion with national office partners, indicating that 

Marcum’s pre-existing guidance did not appear to provide clear answers.  

112. Such questions and confusion also reflected Marcum’s failure to sufficiently 

evaluate, on an ongoing basis, the appropriateness and sufficiency of its training, guidance 

materials, and practice aids.  

113. For example, in light of certain concerns being raised, Marcum acknowledged that 

the relevant completion checklist had not been appropriately maintained or updated since its 

creation and needed significant work and updates, including SPAC customizations.  

114. Many of the questions raised, and confusion illustrated, related to Marcum’s policies 

and procedures relevant to public companies generally.  As such, it was reflective of broad and 

systemic deficiencies in Marcum’s documentation and communication of public company policies 

and procedures generally.  Notably, Marcum’s most recent annual internal inspection, conducted in 

the summer of 2021, not only concluded that 32 SPAC audits contained documentation deficiencies 

requiring the re-opening of the work paper binder—it also found that 37 non-SPAC audits also 

contained documentation deficiencies requiring re-opening.   

115. Marcum’s failure to sufficiently document and communicate relevant policies and 

procedures continued even after the SPAC market’s initial “boom.”  As late as August 2021, 

Marcum’s SPAC partners continued to flag substantial and substantive concerns, including that 

engagement managers failed to sufficiently understand relevant technical issues and certain audit 

standard requirements, and were insufficiently diligent in documenting and reviewing work papers.  

This included, for example, instances in which engagement partners stated managers and staff-level 

personnel were “copying and pasting” documentation from prior audits (including audits performed 

on different clients), without removing extraneous or inaccurate information, updating relevant 

technical references, or appropriately cross-referencing related work papers.  Partners also 

expressed concerns that managers, as well as some partners, were creating documentation without 



 

 22 

sufficiently understanding the underlying accounting or valuation analysis, such as guidance 

received from internal technical specialists.   

116. Marcum relied upon an outside firm (“Firm A”) to conduct staff-level work on 

SPAC engagements.  Marcum’s communication of relevant policies and procedures to personnel at 

Firm A was also insufficient.  Marcum had no centralized or consistent source for guidance for Firm 

A personnel.  Firm A instead received ad hoc guidance from up to 20 different Marcum partners, a 

practice risking confusion and inconsistency.  Additionally, because Firm A was often conducting 

its work prior to a manager or partner being assigned to the engagement, in such instances there 

could be effectively no contemporaneous communication.  Firm A personnel also did not have full 

access to Marcum policies, procedures, and guidance documents.  Firm A personnel, while provided 

Marcum email addresses, were not on relevant SPAC email distribution lists, despite Marcum’s 

SPAC practice relying upon email as a primary mode of communication.  Firm A personnel did 

have access to Marcum work paper templates, but lacked sufficient guidance regarding which 

templates were appropriate and current.  Firm A personnel also did not attend relevant SPAC 

trainings until February 2021, and not all Firm A personnel attended.  

117. The insufficiencies described above also relate back to Marcum’s failure to 

sufficiently evaluate, prior to client acceptance, whether the firm had sufficient capacity to complete 

the engagement work with professional competence, including the capacity of the firm’s overall 

quality control system, including processes and systems to effectively train, educate, and 

communication with personnel.  

E. VIOLATIONS 

RULE 102(e) AND SECTION 4C OF THE EXCHANGE ACT 

118. Section 4C of the Exchange Act and Rule 102(e)(1)(ii) provide, in part, that the 

Commission may censure any person who is found by the Commission to have engaged in 

improper professional conduct.  With respect to persons licensed to practice as accountants, 

“improper professional conduct” includes either of the following two types of negligent conduct: 

(1) a single instance of highly unreasonable conduct that results in a violation of applicable 

professional standards in circumstances in which an accountant knows, or should know, that 

heightened scrutiny is warranted; or (2) repeated instances of unreasonable conduct, each resulting 

in a violation of applicable professional standards, that indicate a lack of competence to practice 

before the Commission.  Rule 102(e)(1)(iv)(B).  As a result of the conduct described above, 

Marcum engaged in “improper professional conduct” within the meaning of Exchange Act Section 

4C(a)(2) and Rule 102(e)(1)(ii).  

Due Professional Care in the Performance of Work (AS 1015) 

119. AS 1015 requires an auditor to exercise “due professional care … in the planning 

and performance of the audit and the preparation of the report.”  AS 1015.01.  “[D]ue professional 

care concerns what the independent auditor does and how well he or she does it.”  AS 1015.04.  



 

 23 

AS 1015.06 provides that “[t]he engagement partner is responsible for the assignment of tasks to, 

and supervision of, the members of the engagement team.”  

120. As a result of Marcum’s conduct described above, Marcum violated this standard in 

numerous engagements.  

Supervision of the Audit Engagement (AS 1201) 

121. AS 1201.03 provides that “the engagement partner is responsible for proper 

supervision of the work of engagement team members and for compliance with PCAOB 

standards.”  AS 1201.05(a) requires the engagement partner to “inform engagement team members 

of their responsibilities,” including, among other items, “the nature, timing, and extent of 

procedures they are to perform.”  The engagement partner should also “[r]eview the work of 

engagement team members to evaluate whether: (1) the work was performed and documented; (2) 

the objectives of the procedures were achieved; and (3) the results of the work support the 

conclusions reached.”  AS 1201.05(c).  AS 1201.06 requires that the engagement partner, in 

determining the extent of supervision necessary, take into account, among other items, “[t]he 

knowledge, skill, and ability of each engagement team member.”  

122. As a result of Marcum’s conduct described above, Marcum violated this standard in 

numerous engagements.  

Audit Documentation (AS 1215) 

123. AS 1215.06 requires that an “auditor must document the procedures performed, 

evidence obtained, and conclusions reached with respect to relevant financial statement assertions.  

Audit documentation must clearly demonstrate that the work was in fact performed . . . .  Audit 

documentation must contain sufficient information to enable an experienced auditor, having no 

previous connection with the engagement, (a) to understand the nature, timing, extent, and results 

of the procedures performed, evidence obtained, and conclusions reached, and (b) to determine 

who performed the work and the date such work was completed as well as the person who 

reviewed the work and the date of such review.”  

124. AS 1215.15 requires that “[p]rior to the report release date, the auditor must have 

completed all necessary auditing procedures and obtained sufficient evidence to support the 

representations in the auditor’s report.”  AS 1215.15 also requires that “[a] complete and final set 

of audit documentation should be assembled for retention as of a date not more than 45 days after 

the report release date (documentation completion date).  If a report is not issued in connection 

with an engagement, then the documentation completion date should not be more than 45 days 

from the date that fieldwork was substantially completed.  If the auditor was unable to complete 

the engagement, then the documentation completion date should not be more than 45 days from the 

date the engagement ceased.”  

125. As a result of Marcum’s conduct described above, Marcum violated this standard in 

numerous engagements.  



 

 24 

Engagement Quality Review (AS 1220) 

126. AS 1220.07 requires that “[t]o maintain objectivity, the engagement quality 

reviewer  … should not make decisions on behalf of the engagement team or assume any of the 

responsibilities of the engagement team.” 

127. AS 1220.19 requires that “[d]ocumentation of an engagement quality review should 

contain sufficient information to enable an experienced auditor, having no previous connection 

with the engagement, to understand the procedures performed by the engagement quality reviewer 

… to comply with the provisions of this standard, including information that identifies,” among 

other items: “[t]he documents reviewed by the engagement quality reviewer,” and “[t]he date the 

engagement quality reviewer provided concurring approval of the issuance.”  

128. As a result of Marcum’s conduct described above, Marcum violated this standard in 

numerous engagements.  

Communications with Audit Committees (AS 1301) 

129. AS 1301.11 requires that an auditor “communicate to the audit committee 

significant changes to the planned audit strategy or the significant risks initially identified and the 

reasons for such changes.”  

130. AS 1301.25 requires that an auditor communicate to the audit committee the 

matters required under the standard, AS 1301, either orally or in writing, and that the auditor “must 

document the communications in the work papers, whether such communications took place orally 

or in writing.”  AS 1301.26 requires that “[a]ll audit committee communications required by this 

standard should be made in a timely manner and prior to the issuance of the auditor’s report.”  

131. As a result of Marcum’s conduct described above, Marcum violated this standard in 

numerous engagements.  

Identifying and Assessing Risks of Material Misstatement (AS 2110) 

132. AS 2110.59 requires that an auditor “identify and assess the risks of material 

misstatement at the financial statement level and the assertion level.”  

133. AS 2110.59(f) requires that an auditor “[d]etermine whether any of the identified 

and assessed risks of material misstatement are significant risks,” based upon the factors relevant to 

identifying significant risks outlined at AS 2110.70-71.  AS 2110.69 requires that an auditor’s 

identification of fraud risks includes the risk of management override of controls.  

134. As a result of Marcum’s conduct described above, Marcum violated this standard in 

numerous engagements.  

PCAOB Quality Control Standards (QC 20) 



 

 25 

135. PCAOB Quality Control Standards, specifically QC 20.01, provides that “a CPA 

firm shall have a system of quality control for its accounting and auditing practice.”  QC 20.03 

broadly defines a system of quality control as “a process to provide the firm with reasonable 

assurance that its personnel comply with applicable professional standards and the firm’s standards 

of quality.”  QC 20.04 provides that “[t]he nature, extent, and formality of a firm’s quality control 

policies and procedures should be appropriately comprehensive and suitably designed in relation to 

the firm’s size, the number of its offices, the degree of authority allowed its personnel and offices, 

the knowledge and experience of its personnel, the nature and complexity of the firm’s practice, 

and appropriate cost-benefit considerations.”  

136. QC 20.13 requires a firm to have policies and procedures to provide reasonable 

assurance that “[w]ork is assigned to personnel having the degree of technical training and 

proficiency required in the circumstances,” and that “[p]ersonnel participate in general and 

industry-specific continuing professional education and other professional development activities 

that enable them to fulfill responsibilities assigned.”  

137. QC 20.14 requires a firm to establish policies and procedures related to the 

acceptance and continuance of clients and engagements, and that such policies and procedures are 

sufficient to provide the firm “reasonable assurance that the likelihood of association with a client 

whose management lacks integrity is minimized.”  

138. QC 20.15(a) requires that a firm’s policies and procedures related to acceptance and 

continuance of clients and engagements are sufficient to provide reasonable assurance that the firm 

“undertakes only those engagements that the firm can reasonably expect to be completed with 

professional competence.”  

139. QC 20.17 requires a firm to have policies and procedures to provide reasonable 

assurance that work performed by engagement personnel complies with professional standards and 

the firm’s own standards of quality.  QC 20.18 provides that these policies and procedures should 

cover, among other things, “planning, performing, supervising, reviewing, documenting, and 

communicating the result of each engagement,” as well as engagement quality reviews.  

140. QC 20.19 requires a firm to have policies and procedures sufficient to provide 

reasonable assurance that personnel, among other things, “consult, on a timely basis, with 

individuals within or outside the firm, when appropriate,” including that “[i]ndividuals consulted [] 

have appropriate levels of knowledge, competence, judgment, and authority.”  

141. QC 20.20 also imposes requirements on firms to properly monitor whether the 

firm’s quality control policies and procedures are suitably designed and are being effectively 

applied.   

142. QC 20.23 requires a firm to “communicate its quality control policies and 

procedures to its personnel in a manner that provides reasonable assurance that those policies and 

procedures are understood and complied with.”  QC 20.24 provides that “[t]he size, structure, and 



 

 26 

nature of the practice of the firm should be considered in determining whether documentation of 

established quality control policies and procedures is required for effective communication and, if 

so, the extent of such documentation,” stating that “documentation of established quality control 

policies and procedures would generally be expected to be more extensive in a large firm than in a 

small firm and in a multioffice firm than in a single-office firm.”  

143. As a result of Marcum’s conduct described above, Marcum violated QC 20. 

MARCUM VIOLATED RULE 2-02(b)(1) OF REGULATION S-X 

144. Rule 2-02(b)(1) of Regulation S-X requires an accountant’s report to state the 

applicable professional standards under which the audit was conducted.  

145. Through the conduct described above, Marcum violated Rule 2-02(b)(1) of 

Regulation S-X in connection with the issuance of numerous SPAC audit reports, all of which 

stated that Marcum had conducted its audit in accordance with PCAOB standards.  

E.  FINDINGS 

146. Based on the foregoing, the Commission finds that Respondent violated Rule 2-

02(b)(1) of Regulation S-X.  

147. Based on the foregoing, the Commission finds that Respondent engaged in 

improper professional conduct pursuant to Sections 4C(a)(2) of the Exchange Act and Rule 

102(e)(1)(ii).  

F. REMEDIAL EFFORTS 

148. In connection with the conduct described above, Marcum has undertaken certain 

remedial steps, including revisions to certain quality control policies and procedures.  Such efforts 

have been considered by the Commission in determining to accept Marcum’s Offer, and will be 

reviewed by the Independent Consultant, as described below.  

G. UNDERTAKINGS  

INDEPENDENT CONSULTANT 

149. Respondent Marcum shall retain, within sixty (60) days after the entry of this 

Order, an independent consultant (“Independent Consultant”), not unacceptable to the Commission 

Staff in the Division of Enforcement (“Commission Staff”) and the PCAOB Staff.  Marcum shall 

provide the Commission Staff and the PCAOB Staff with notice of possible Independent 

Consultant candidates no later than thirty (30) days following the entry of this Order.  The 

Commission Staff and the PCAOB Staff shall have ten (10) business days to communicate whether 

the Independent Consultant candidates are not unacceptable to the Commission Staff and the 

PCAOB Staff.  Marcum shall, upon request by the Commission Staff or the PCAOB Staff, provide 



 

 27 

information about the Independent Consultant’s work plan to the Commission Staff and the 

PCAOB Staff including the Independent Consultant’s experience, ability to staff the engagement, 

and expertise in auditing and audit firm quality controls.  Marcum shall provide to the Commission 

Staff and the PCAOB Staff a copy of the engagement letter detailing the scope of the Independent 

Consultant’s responsibilities within three (3) months after the entry of this Order.  If requested by 

Commission Staff or the PCAOB Staff, Marcum shall make the Independent Consultant available 

to Commission Staff and the PCAOB Staff to make presentations, provide updates, and explain the 

work, progress, and conclusions.  The Independent Consultant’s compensation and reasonable 

expenses shall be borne exclusively by Marcum. 

(i). Independence 

150. To ensure the independence of the Independent Consultant, Marcum: shall not 

have the authority to terminate the Independent Consultant or substitute another independent 

consultant for the initial Independent Consultant, without the prior written approval of the 

Commission Staff and the PCAOB Staff; and shall compensate the Independent Consultant and 

persons engaged to assist the Independent Consultant for services rendered pursuant to this Order 

at their reasonable and customary rates. 

151. Marcum will require the Independent Consultant to enter into an agreement that 

provides that, for the period of engagement and for a period of two (2) years after the issuance of 

the Independent’s Consultant’s final report (as defined in Paragraph 159), the Independent 

Consultant shall not enter into any employment, consultant, attorney-client, auditing or other 

professional relationship with Marcum, or any of its present or former affiliates, directors, officers, 

partners, employees, or agents acting in their capacity as such. The agreement will also provide 

that the Independent Consultant will require that any firm with which he/she is affiliated or of 

which he/she is a member, and any person engaged to assist the Independent Consultant in the 

performance of his/her duties under this Order shall not, without prior written consent of the 

Commission Staff and the PCAOB Staff, enter into any employment, consultant, attorney-client, 

auditing or other professional relationship with Marcum, or any of its present or former affiliates, 

directors, officers, partners, employees, or agents acting in their capacity as such for the period of 

the engagement and for a period of two (2) years after the issuance of the Independent Consultant’s 

final report (as defined by Paragraph 159). 

152. With respect to Commission Staff and the PCAOB Staff, Marcum will not assert 

any legal privilege over communications with or work product prepared by the Independent 

Consultant. 

(ii). Scope of Independent Consultant’s Review 

153. Within the time periods specified below, the Independent Consultant will review 

and evaluate Marcum’s audit, review, and quality control policies and procedures as to, among 

other aspects, their sufficiency, adequacy, design, implementation, operation, and effectiveness, 



 

 28 

applicable to Audit Clients7 regarding the subjects set forth below.  The Independent Consultant’s 

purpose for this review and evaluation will be to make recommendations for improvements to 

policies and procedures that: 

a. Provide reasonable assurance that personnel comply with applicable 

professional standards and the firm’s standards of quality (see QC 20.03, 

QC 20.17, and QC 20.20) including: 

1. That due professional care is exercised in the planning and performance 

of the audit and the preparation of the report.  See AS 1015. 

2. That engagement partners are properly supervising the work of 

engagement team members and for compliance with PCAOB standards, 

including reviewing the work of engagement team members to evaluate 

whether the work was performed and documented, the objectives of the 

procedures were achieved, and the results of the work support the 

conclusions reached.  See AS 1201. 

3. That auditors are documenting the procedures performed, evidence 

obtained, and conclusions reached with respect to relevant financial 

statement assertions, and that audit documentation contains sufficient 

information for an experienced auditor, having no previous connection 

with the engagement to (a) understand the nature, timing, extent, and 

results of the procedures performed, evidence obtained, and conclusions 

reached, and (b) to determine who performed the work and the date such 

work was completed as well as the person who reviewed the work and 

the date of such review. See AS 1215.06. 

4. That audit documentation and other documents, including emails that 

contain audit documentation, are being retained for the length of time 

required by PCAOB standards and Commission rules or SEC 

regulations, unless a longer period of time is otherwise required by law.  

See AS 1215.14.  

5. That prior to the audit report release date, the auditor completed all 

necessary auditing procedures and obtained sufficient evidence to 

support the representations in the auditor’s report.  See AS 1215.15.  

6. That a complete and final set of audit documentation is assembled for 

retention as of a date not more than 45 days after the report release date 

                                                 

7 An “Audit Client,” for purposes of these undertakings, means any SEC registrant or any client 

for which the audit or review was required by the federal securities laws. 



 

 29 

(“documentation completion date”) and that documentation 

requirements are also met for unfinished or incomplete engagements.  

See AS 1215.15. 

7. That audit documentation is not deleted or discarded after the 

documentation completion date and that any information and 

documentation added after the documentation completion date must 

indicate the date the information was added, the name of the person who 

prepared the additional documentation, and the reason for adding it.  See 

AS 1215.16. 

8. That engagement quality reviewers and others who assist the reviewer 

should not make decisions on behalf of the engagement team or assume 

any of the responsibilities of the engagement team.  See AS 1220.07.  

9. That engagement quality review should contain sufficient information to 

enable an experienced auditor, having no previous connection with the 

engagement, to understand the procedures performed by the engagement 

quality reviewer, and others who assisted the reviewer, to comply with 

the provisions of this standard, including information that identifies: (a) 

the documents reviewed by the engagement quality reviewer, and others 

who assisted the reviewer, and (b) the date the engagement quality 

reviewer provided concurring approval of issuance or, if no concurring 

approval of issuance was provided, the reasons for not providing the 

approval. See AS 1220.19. 

10. That the auditor is communicating to the audit committee significant 

risks identified and any changes throughout the course of the 

engagement.  See AS 1301.09 and .11. 

11. That the auditor is communicating to the audit committee the matters 

required to be communicated by AS 1301, either orally or in 

writing, unless otherwise specified in AS 1301, and is documenting 

those communications in the work papers, including whether such 

communications took place orally or in writing.  See AS 1301.25. 

12. That all audit committee communications required by AS 1301 are 

made in a timely manner and prior to the issuance of the auditor’s 

report.  See AS 1301.26. 

13. That the auditor is identifying and assessing the risks of material 

misstatement at the financial statement level and the assertion level.  See 

AS 2110.59. 

14. That the auditor is identifying and assessing significant risks consistent with AS 



 

 30 

2110.69, 70, and .71. 

b. Provide the firm with reasonable assurance that the policies and procedures 

established by the firm for each of the elements of quality control described 

in QC 20 are suitably designed and are being effectively applied, as 

applicable to the audit standards cited in this Order.  See QC 20.03, QC 

20.17, and QC 20.20; AS 1015; AS 1201; AS 1215.06, .14, .15, and .16; AS 

1220.07 and .19; AS 1301; and AS 2110.59, .69, .70, and .71. 

c. Provide the firm with reasonable assurance that work is assigned to personnel 

having the degree of technical training and proficiency required in the 

circumstances and that personnel participate in general and industry-specific 

continuing professional education and other professional development 

activities that enable them to fulfill responsibilities assigned.  See QC 

20.13(b) and (c). 

d. Provide the firm with reasonable assurance that the likelihood of association 

with a client whose management lacks integrity is minimized.  See QC 20.14. 

e. Provide the firm with reasonable assurance that the firm undertakes only 

those engagements that the firm can reasonably expect to be completed with 

professional competence, including, but not limited to policies and 

procedures related to the client acceptance process, the Client Acceptance 

Committee, and staffing capacity as related to client acceptance.  See QC 

20.15(a). 

f. Provide the firm with reasonable assurance that personnel refer to 

authoritative literature or other sources and consult, on a timely basis, with 

individuals within or outside the firm, when appropriate and that the 

individuals consulted should have appropriate levels of knowledge, 

competence, judgment, and authority.  See QC 20.19. 

g. Provide the firm with reasonable assurance that quality control policies and 

procedures are being communicated to personnel and that they are understood 

and complied with, and that the firm has established a means of 

communicating its established quality control policies and procedures, and 

the changes thereto, to appropriate personnel on a timely basis.  See QC 

20.23; QC 20.24. 

154. Marcum shall cooperate fully with the Independent Consultant and shall provide 

reasonable and timely access to any firm personnel, information, and records (including audit and 

consultation documents) as the Independent Consultant may reasonably request for the 

Independent Consultant’s review and evaluation described in Paragraph 153 above and the reports 

specified in Paragraphs 155 through 162 below. 



 

 31 

(iii). Independent Consultant Reports and Certifications 

155. Within eight (8) months after the entry of this Order, Marcum shall require the 

Independent Consultant to issue a detailed written report (“Initial Report”) to Marcum: (i) 

summarizing the Independent Consultant’s review and evaluation of the areas identified in 

Paragraph 153 and its subsections above; and (ii) making recommendations, where appropriate, 

reasonably designed to ensure that audits conducted by Marcum comply with PCAOB standards 

and rules and any applicable federal securities laws.  Marcum shall require the Independent 

Consultant to provide a copy of the Initial Report to the Commission Staff and the PCAOB Staff 

when the Initial Report is issued.  Marcum shall also make the Independent Consultant available to 

Commission Staff and the PCAOB Staff to discuss its work both periodically and after issuance of 

the report. 

156. Marcum will adopt and implement, as soon as practicably possible, but in any 

event no later than two (2) years after the entry of this Order, and in compliance with the 

requirements set forth in Paragraphs 157-163 below, all recommendations of the Independent 

Consultant in the Initial Report.  Provided, however, that within thirty (30) days of issuance of the 

Initial Report, Marcum may advise the Independent Consultant in writing of any recommendation 

that it considers to be unnecessary, unjust, outside the scope of this Order, unduly burdensome, or 

impractical.  Marcum need not adopt any such unnecessary, unjust, outside the scope of this Order, 

unduly burdensome, or impractical recommendation at that time, but instead may propose in 

writing to the Independent Consultant an alternative recommendation (an “Alternative 

Recommendation”) designed to achieve the same objective or purpose.  Marcum will provide any 

such Alternative Recommendation(s) to the Commission Staff and the PCAOB Staff at the same 

time that Marcum submits such Alternative Recommendation(s) to the Independent Consultant.  

Marcum and the Independent Consultant shall engage in good faith negotiations in an effort to 

reach agreement on any recommendations objected to by Marcum.  

157. In the event that the Independent Consultant and Marcum are unable to agree on 

any Alternative Recommendation(s) within sixty (60) days of the issuance of the Initial Report, 

Marcum shall abide by the determinations of the Independent Consultant.    

158. Within sixty (60) days of issuance of the Initial Report, Marcum will certify to the 

Commission Staff and the PCAOB Staff in writing that (i) Marcum has adopted and has 

implemented or will implement all recommendations of the Independent Consultant; and (ii) the 

Independent Consultant agrees that Marcum has adopted, implemented, and/or has a plan for 

implementation (the “Certification of Agreement to Adopt Recommendations”).  Marcum will 

provide a copy of the Certification of Agreement to Adopt Recommendations to the Commission 

Staff and the PCAOB Staff.  To the extent that Marcum has not implemented all recommendations 

contained in the Initial Report by that time, Marcum will certify to the Commission Staff and the 

PCAOB Staff in writing, no later than thirty (30) days after their implementation, that (i) Marcum 

has adopted and has implemented all recommendations contained in the Initial Report; and (ii) the 

Independent Consultant agrees that the recommendations have been adequately adopted and 

implemented by Marcum (“Implementation Certification”).  



 

 32 

159. Within six (6) months of the issuance of the Initial Report or the Implementation 

Certification, whichever is later, Marcum shall require the Independent Consultant to complete 

testing to assess (i) whether Marcum has implemented the written policies and procedures 

concerning the areas specified in Paragraph 153 and its subsections above and (ii) the effectiveness 

of the design and implementation of those policies and procedures.  At least thirty (30) days prior 

to beginning the testing, Marcum shall provide to the Commission Staff and the PCAOB Staff a 

copy of the scope and parameters for testing.  The Commission Staff and the PCAOB Staff shall 

have ten (10) days to provide comments.  Within thirty (30) days of the completion of this testing, 

Marcum shall require the Independent Consultant to issue a written report summarizing the results 

of the Independent Consultant’s testing and assessment, and if applicable, any recommendations 

(“Final Report”) and to provide a copy of the Final Report to the Commission Staff and the 

PCAOB Staff.  At this time, if the Independent Consultant determines that Marcum has adopted 

and implemented all recommendations set forth in the Initial Report and that Marcum’s quality 

control policies addressing those recommendations and the policies specified in Paragraph 153 and 

its subsections are functioning effectively, Marcum shall require the Independent Consultant to 

certify in writing that Marcum has satisfied such undertakings (“Independent Consultant 

Certification”) and provide a copy of this certification to the Commission Staff and the PCAOB 

Staff.  In all events, Marcum must complete all undertakings concerning the implementation of the 

recommendations set forth in the Independent Consultant’s Initial Report, and any amended 

recommendations, and provide the Independent Consultant Certification to the Commission Staff 

no later than two (2) years after the entry of this Order. 

160. To the extent that the Final Report has additional recommendations that Marcum 

has not implemented, within thirty (30) days of issuance of the Final Report, Marcum will certify 

to the Commission Staff and the PCAOB Staff in writing that it has adopted and has implemented 

or will implement all additional recommendations of the Independent Consultant (“Final 

Certification of Agreement to Adopt Recommendations”).  Marcum will provide a copy of the 

Final Certification of Agreement to Adopt Recommendations to the Commission Staff and the 

PCAOB Staff.  To the extent that Marcum has not implemented all additional recommendations 

contained in the Final Report by that time, Marcum will certify to the Commission Staff and the 

PCAOB Staff in writing, by thirty (30) days after their implementation, that Marcum has adopted 

and has implemented all recommendations contained in the Final Report (“Final Implementation 

Certification”).  In all events, Marcum must complete all undertakings concerning the 

implementation of the recommendations set forth in the Independent Consultant’s Final Report no 

later than four (4) months after the issuance of the Final Report. 

161. The Initial Report, Final Report, Certification of Agreement to Adopt 

Recommendations, Implementation Certification, Independent Consultant Certification, Final 

Certification of Agreement to Adopt Recommendations, and Final Implementation Certification, 

and any related correspondence or other documents shall be submitted to Laura B. Josephs, 

Assistant Director, Division of Enforcement, Securities and Exchange Commission, 100 F Street 

NE, Washington DC, 20549, with a copy to the Office of Chief Counsel of the Enforcement 

Division, and to the PCAOB, Director of Enforcement and Investigations, 1666 K Street NW, 

Washington DC, 20006. 



 

 33 

162. The Initial Report and Final Report by the Independent Consultant will likely 

include confidential financial, proprietary, competitive business or commercial information.  

Public disclosure of these reports could discourage cooperation, impede pending or potential 

government investigations or undermine the objectives of the reporting requirement.  For these 

reasons, among others, these reports and the contents thereof are intended to remain and shall 

remain non-public, except (1) pursuant to court order, (2) as agreed to by the parties in writing, (3) 

to the extent that the Commission determines in its sole discretion that disclosure would be in 

furtherance of the Commission’s discharge of its duties and responsibilities, or (4) is otherwise 

required by law. 

163. No later than sixty (60) days from the date that Marcum signs the Final 

Implementation Certification, Marcum’s CEO and Marcum’s leader of quality control policies and 

procedures shall both certify, in writing, compliance with the undertakings set forth above.  The 

certification shall identify the undertakings, provide written evidence of compliance in the form of 

a narrative, and be supported by exhibits sufficient to demonstrate compliance.  The Commission 

Staff may make reasonable requests for further evidence of compliance, and Marcum agrees to 

provide such evidence.  This certification and supporting material shall be submitted to Laura B. 

Josephs, Assistant Director, Division of Enforcement, Securities and Exchange Commission, 100 F 

Street NE, Washington DC, 20549, with a copy to the Office of Chief Counsel of the Enforcement 

Division, 100 F Street NE, Washington DC, 20549,  and to the PCAOB, Director of Enforcement 

and Investigations, 1666 K Street NW, Washington DC, 20006, no later than sixty (60) days from 

the date of the completion of the undertakings. 

164. For good cause shown, and solely at the discretion of the Commission Staff and 

the PCAOB Staff, the Commission Staff and PCAOB Staff may extend any of the procedural dates 

relating to the undertakings.  Deadlines for procedural dates shall be counted in calendar days, 

except that if the last day falls on a weekend or federal holiday, the next business day shall be 

considered to be the last day. 

165. If the Commission Staff believes that Marcum has not satisfied these 

undertakings, the Commission Staff may petition the Commission to reopen the matter to 

determine whether additional sanctions are appropriate. 

MARCUM’S ACCEPTANCE OF NEW ISSUER AUDIT CLIENTS 

166. Between the date of entry of this Order and the date on which Marcum provides a 

copy of the Certification of Agreement to Adopt Recommendations to the Commission Staff, 

and pursuant to the Independent Consultant’s review and approval as provided in Paragraph 168, 

Marcum shall accept no more than three (3) new audit clients (“New Audit Clients”) per quarter.8  

                                                 

8 A New Audit Client is defined as an entity seeking audit services from Marcum that is (a) an 

issuer, as that term is defined in Section 2(a)(7) of the Sarbanes-Oxley Act of 2002; or (b) is 

seeking audit services for the purpose of registering securities with the Commission. 



 

 34 

Quarters shall be calculated starting with the date of entry of this Order, running in ninety (90) day 

increments thereafter.  In the event that Marcum has attrition of non-SPAC audit clients (“Non-

SPAC Audit Clients”9) that Marcum is serving as of the date of this Order, Marcum may accept 

additional New Audit Clients equal to the number of departed Non-SPAC Audit Clients, but may 

not in any event accept more than a total of two (2) additional New Audit Clients per quarter.  

To the extent that Marcum accepts fewer New Audit Clients than the maximum allowable within a 

quarter, the number of allowable New Audit Clients will “rollover” into subsequent quarters.  The 

Independent Consultant shall report to the Commission Staff on a quarterly basis the New Audit 

Clients Marcum has accepted and will confirm that the Independent Consultant has approved 

acceptance of such New Audit Clients pursuant to the New Audit Client Protocol described in 

Paragraph 168.  The Independent Consultant shall not approve any New Audit Client that meets 

the criteria described in Paragraph 168.  

167. Between the date of entry of this Order and the date on which Marcum provides a 

copy of the Certification of Agreement to Adopt Recommendations to the Commission Staff, 

Marcum shall not accept any New Audit Clients that meet any of the following criteria:  

a. the new engagement would begin after September 30 of the year under audit for 

December 31 year-end audits, or more than nine (9) months after the prior fiscal 

year-end date for year-end audits of entities with fiscal year-ends other than 

December 31;  

b. the New Audit Client conducts the majority of its operations from outside of the 

United States, unless such foreign operations of the New Audit Client are audited 

by a PCAOB-registered firm serving as an “other auditor,” as defined by AS 2101, 

as amended, paragraph .A5; or for New Audit Clients that do not have operations, 

its principal executive offices are located outside the United States; 

c. the New Audit Client has an un-remediated material weakness in its internal 

controls over financial reporting (a “MWICFR”); or 

d. the New Audit Client has received an audit report containing an explanatory 

paragraph indicating that a substantial doubt about its ability to continue as going 

concern existed as of the end of the past fiscal year.   

                                                 

9 A Non-SPAC Audit Client is defined as an entity that (a) is not and was not a special purpose 

acquisition company (“SPAC”) and (b) is (i) an issuer, as that term is defined in Section 2(a)(7) 

of the Sarbanes-Oxley Act of 2002, or (iii) receiving audit services from Marcum for the purpose 

of registering securities with the Commission.  



 

 35 

168. Between the date of entry of this Order and the date on which Marcum provides a 

copy of the Implementation Certification to the Commission Staff, the Independent Consultant 

shall review and approve any New Audit Clients, pursuant to the following:  

a. Marcum shall provide the Independent Consultant a minimum of sixty (60) days to 

prepare a written protocol for reviewing and approving the New Audit Clients 

(“New Audit Client Protocol”).  The sixty (60) day period shall commence on the 

date upon which the Independent Consultant is formally retained by Marcum.  

Marcum shall require the Independent Consultant to provide a copy of the New 

Audit Client Protocol to the Commission Staff.  The Commission Staff shall have 

ten (10) business days to communicate whether the New Audit Client Protocol is 

not unacceptable to the Commission Staff.  The New Audit Client Protocol shall 

outline, at a sufficient level of detail, procedures to be performed in connection with 

the review of any prospective New Audit Client, including documents and 

information to be requested and reviewed, factors to be analyzed, and discussions, 

meetings, or interviews to be held, as needed.  The New Audit Client Protocol shall 

also outline documentation to be created, in connection with the review of any 

prospective New Audit Client, which documentation shall memorialize, at a 

sufficient level of detail, procedures performed and conclusions reached in 

connection with the review of any prospective New Audit Client (the “New Audit 

Client Acceptance Documentation”).  The New Audit Client Protocol shall also 

take into consideration the following factors: 

i. whether as of the date the proposed new engagement is considered, 

Marcum’s policies, procedures, and quality control system, as known or 

observed by the Independent Consultant at the time of acceptance are 

sufficient for Marcum to conduct the engagement in accordance with all 

applicable professional standards;  

ii. whether the proposed engagement partner, EQR, and engagement team 

members at the level of manager and above possess the requisite 

competence, experience, and technical proficiency to conduct the 

engagement in accordance with PCAOB auditing standards;  

iii. whether the proposed engagement partner, EQR, and engagement team 

members have sufficient capacity to complete their respective 

responsibilities within the requisite time frame and with professional 

competence and in accordance with all applicable professional standards; 

iv. whether the staffing resources proposed to be dedicated to the engagement 

are sufficient to conduct the engagement in accordance with applicable 

professional standards; and  



 

 36 

v. whether the New Audit Client has reported a remediated MWICFR as of the 

previous fiscal year-end, and its impact on the client acceptance decision.  

b. Marcum shall require the Independent Consultant to apply the New Audit Client 

Protocol to assess and approve any New Audit Clients.  New Audit Client 

Acceptance Documentation must be completed, in a sufficient level of detail, in 

connection with the review of any prospective New Audit Client; such 

documentation must also be sufficient to reflect the date upon which the New Audit 

Client Protocol procedures were performed, and that such procedures were 

performed prior to any formal acceptance of the New Audit Client by Marcum.  

In the event the Independent Consultant does not approve the acceptance of a New 

Audit Client, Marcum shall not accept the client. 

c. Marcum shall maintain all New Audit Client Acceptance Documentation for a 

period of seven (7) years, regardless of whether a New Audit Client was accepted, 

and shall make such documentation available to Commission Staff upon request, 

within five (5) business days of any such request.   

MARCUM ASIA 

169. Marcum shall ensure that all Independent Consultant recommendations adopted 

and implemented by Marcum as described in Paragraphs 155 through 165 will also be adopted and 

implemented by Marcum Asia. 

170. Certifications by Marcum required by Paragraphs 158 and 160 (Certification of 

Agreement to Adopt Recommendations; Implementation Certification; Final Certification of 

Agreement to Adopt Recommendations; and Final Implementation Certification) shall include 

parallel representations by Marcum regarding adoption and implementation for Marcum Asia. 

171. From the date of entry of this Order until the date of the Implementation 

Certification, all Marcum Asia New Audit Clients10 will be reviewed and approved by the 

Independent Consultant pursuant to the requirements described in Paragraph 168.  Except, 

however, the Independent Consultant will not approve any Marcum Asia New Audit Client that 

conducts the majority of its operations from within the United States or whose principal executive 

offices are in the United States.   

                                                 

10 A Marcum Asia New Audit Client is defined as an entity seeking audit services from Marcum 

Asia that is (a) an issuer as that term is defined in Section 2(a)(7) of the Sarbanes-Oxley Act of 

2002; (b) registered with the Commission; or (c) for the purpose of registering securities with the 

Commission from the date of entry of this Order. 



 

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TRAINING AND PROFESSIONAL DEVELOPMENT 

172. Marcum shall require each audit professional to undergo training, as applicable, 

related to changes to the firm’s policies and procedures that result from the Independent 

Consultant’s Initial Report and Final Report. 

COMMUNICATION TO AUDIT PROFESSIONALS 

173. Marcum shall inform its audit professionals of the terms of the Order within ten 

(10) days after entry of the Order. 

IV. 

In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent’s Offer.  

Accordingly, it is hereby ORDERED, effective immediately, that:  

A.  Respondent shall cease and desist from committing or causing any violations and 

any future violations of Rule 2-02(b)(1) of Regulation S-X. 

B. Respondent is censured. 

C.  Respondent shall comply with its undertakings enumerated in Paragraphs 149-173 

of Section III above.  

D.   Respondent shall, within 10 days of the entry of this Order, pay a civil money 

penalty in the amount of $10 million to the Securities and Exchange Commission.  If timely 

payment is not made, additional interest shall accrue pursuant to 31 U.S.C. 3717. 

E. Payment must be made in one of the following ways:   

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

http://www.sec.gov/about/offices/ofm.htm


 

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Oklahoma City, OK 73169 

Payments by check or money order must be accompanied by a cover letter identifying 

Marcum LLP as a Respondent in these proceedings, and the file number of these proceedings; a 

copy of the cover letter and check or money order must be sent to Carolyn Welshhans, Associate 

Director, Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, 

Washington, DC 20549.   

 F. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 

the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 

Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 

an additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 

private damages action brought against Respondent by or on behalf of one or more investors based 

on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

  By the Commission. 

Vanessa A. Countryman 

        Secretary