Audit regulators have fined a former EY auditor $25,000 for failing to properly evaluate a client’s internal control deficiencies during a 2013 audit.

The Public Company Accounting Oversight Board said William Trainor and his engagement team identified “pervasive” deficiencies in controls for two of Forest Oil’s most critical IT systems but improperly concluded that “compensating controls” mitigated the risks from those deficiencies.

“As Trainor knew, these ITGC deficiencies … had the potential to lead to material misstatements in the company’s financial statements,” the board said in an enforcement order.

After a PCAOB review of the audit, EY determined there were three material weaknesses in Forest Oil’s internal controls over financial reporting and issued an amended, adverse 2013 ICFR opinion for the energy producer.

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The enforcement order also bars Trainor from associating with a firm registered with the PCAOB for at least a year. He left EY in 2016 and is now the CFO of a private company, according to an online professional bio.

Separately, the PCAOB also sanctioned former PwC audit manager Humayoun Khan for altering archived documentation from an audit after learning of an impending board inspection.

Through the changes, Khan “substantially revised the description of the work the engagement team performed in connection with [the client’s] liquidity risk disclosure,” the PCAOB said in the enforcement order.

In Trainor’s case, the board said Forest Oil’s IT control deficiences “created the risk that Forest Oil personnel could make unauthorized changes to information in the affected systems without detection, potentially leading to material misstatements in Forest Oil’s financial statements. These control deficiencies affected essentially every significant account and disclosure at Forest Oil.”

According to the PCAOB, Trainor concluded he did not have to issue an adverse ICFR opinion even after reviewing evidence that the compensating controls did not, in fact, mitigate the risks from the control deficiencies because they did not operate at a precise enough level to prevent or detect a material misstatement arising from the deficiencies.

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