Sharpe CPA / For CPAs / Goodwill, intangibles and going concern
Goodwill, acquired intangibles and going concern are where small and mid-size audit firms keep getting fined. The failures are not exotic. Management's projections were accepted, a specialist's report was filed instead of tested, and the reviews that should have caught it signed off. This page lays out what went wrong in the recent orders, a screener for the warning signs, and a checklist that covers the procedures those firms skipped.
The latest order
Settled orders are entered without admitting or denying the findings. Figures are as reported from the order; read the order itself (PCAOB Release No. 105-2026-014) before relying on any detail.
The pattern
Recent PCAOB settled orders in which goodwill, intangible assets or going concern were part of the findings.
| Firm and date | What the order found | Sanction |
|---|---|---|
| Macias Gini & O’Connell LLP Nov 2026 | Going concern accepted on a projection the team’s own work contradicted; goodwill and intangible valuation; documentation; quality control over engagement performance and monitoring. | $500,000 firm; partner $40,000 and one-year limitation; EQR $25,000 |
| Zhen Hui (Hong Kong) Jul 2026 | Goodwill about half of total assets, tested for impairment with a discounted cash flow model the auditors did not adequately test; revenue testing; audit committee communications; quality control. | $60,000; censure; registration revoked, may reapply after two years |
| Michael T. Studer CPA Jun 2025 | Did not test management’s estimates behind a $106 million goodwill and intangible impairment; revenue; sign-offs entered for work not performed; no EQR. | Permanent bar and revocation; $20,000 |
| L&L CPAs, PA Jun 2024 | No sufficient evidence for the existence, valuation, presentation and disclosure of a purported intangible that was over half of total assets; critical audit matter misdescribed; EQR without due care. | $75,000 firm; $50,000 partner; $25,000 EQR |
| Liggett & Webb partners May 2024 | Fair value of goodwill and intangibles not adequately tested; no substantive procedures specifically responsive to the significant risk; specialist’s findings not evaluated. | Sanctions against two partners and the EQR |
| Halperin Ilanit CPA (Israel) Mar 2024 | Valuation of an intangible asset; critical audit matters not evaluated; documentation; no EQR. | $200,000; revoked, three years |
| Gries & Associates Mar 2024 | No procedures on whether a merger was a reverse acquisition despite red flags; the restatement removed about $3.6 billion of goodwill, 56% of reported assets. | $65,000; revoked one year; partner barred |
| Weinstein International CPA Dec 2024 | Existence and valuation of intangible assets in two audits; due care and skepticism. | Censure; revoked, three years; partner barred |
| RAM Associates & Co. Aug 2023 | Valuation of goodwill and use of a specialist’s work in two audits. | $150,000; revoked; partner barred |
Where it goes wrong
Screener
Enter what you know from the trial balance, the forecast and last year’s file. Leave blank what you do not have. It flags the conditions that showed up in the orders above and points to the checklist sections that answer them. Nothing leaves your browser.
The thresholds are the firm's own rules of thumb, not requirements of any standard. A clean screen is not evidence.
Checklist
Each step cites the PCAOB standard for issuer audits and the AICPA section for everyone else. Check them off as the work is done; your progress stays in this browser. Print it or export it to put in the file as a planning aid. It does not replace the firm's audit program.
One forecast
The MGO order turned on a contradiction any reviewer could have seen by laying the workpapers side by side. Before the opinion is released, put the forecasts behind these balances on one page and reconcile them.
| Estimate | Uses the forecast for | Ask |
|---|---|---|
| Going concern | Cash in and out for at least the next year | Does the cash forecast use the same revenue and margin as the impairment model? |
| Goodwill impairment | Five or more years of cash flows plus a terminal value | If year one is a shortfall, how does the reporting unit's fair value still exceed its carrying amount? |
| Intangibles and long-lived assets | Undiscounted cash flows of the asset group; remaining useful lives | Are customer attrition and useful lives the same ones used in the acquisition valuation? |
| Deferred tax assets | Future taxable income for the valuation allowance | Is the company forecasting profits for tax and losses for going concern? |
| Contingent consideration | Probability of hitting earn-out targets | Is the earn-out liability falling while the goodwill model assumes growth? |
| Debt covenants and classification | Covenant ratios at each test date | Does the forecast trip a covenant that makes long-term debt current? |
Sharpe CPA portal subscribers record this work on the Going concern and DCF workpapers inside each client plan.
Sources
The standards control. Case summaries are drawn from PCAOB settled orders and published reports of them; the orders were entered without the respondents admitting or denying the findings. The screener thresholds are the firm's own.