The Public Company Accounting Oversight Board sanctioned James PAI CPA and its sole owner and partner Yu-Ching James Pai for audit failures.

The PCAOB found that Pai and his firm violated multiple PCAOB rules and standards in connection with two audits of one issuer client, that the firm violated quality control standards, and that Pai directly and substantially contributed to those violations. In the audits, the firm and Pai failed to perform risk assessments and obtain sufficient audit evidence in multiple areas, including revenue and related party transactions.

“Performing appropriate risk assessments and obtaining sufficient evidence are fundamental to an audit, and failure to meet these most basic requirements puts investors at risk,” PCAOB chair Erica Williams said in a statement.

The PCAOB also found that, in the audits, the firm failed to perform engagement quality reviews, obtain written representations from management, comply with requirements concerning critical audit matters and audit committee communications and documentation, and establish a system of quality control.

“Issuing an audit report stating that the audit was performed in accordance with PCAOB standards is a solemn commitment to the investing public, and serious consequences can follow when an auditor fails to meet that commitment,” Robert Rice, director of the PCAOB’s Division of Enforcement and Investigations said in a statement.

Without admitting or denying the findings, Pai and the firm consented to the PCAOB’s order, which:

• Censures Pai and the firm and imposes a $40,000 civil money penalty, jointly and severally, against them;
• Revokes the firm’s PCAOB registration with a right to reapply after three years;
• Bars Pai from being an associated person of a PCAOB-registered firm, with a right to petition the Board to terminate his bar after three years;
• Requires the firm to undertake remedial actions to improve its system of quality control and procedures before reapplying for registration; and,
• Requires Pai to complete 40 CPE hours before seeking to terminate his bar.

Bridgewater Associates founder Ray Dalio warned House Republicans of the dangers of rising U.S. deficits and urged them to cut the budget deficit to just 3% of gross domestic product or risk debt service costs squeezing government spending.  

Dalio’s message of austerity comes as House and Senate Republicans battle over the size of spending cuts to be paired with a giant tax cut coming later this year. The U.S. budget deficit was 6.6% of GDP in 2024, according to the Congressional Budget Office. 

“There was a good understanding of the choices and the possibilities to manage this dire situation over time,” Dalio said in a statement after the meeting. “I look forward to staying in touch about these issues and having similar discussions with others so that there are realistic assessments of the issues and what might be done to deal with them.”

The House has drafted a $4.5 trillion tax cut blueprint paired with $2 trillion in spending cuts over ten years, which would add about $3 trillion to deficits over the decade. Senate Republicans want to deploy a budget gimmick to allow them to add trillions more in tax cuts without more spending cuts. House and Senate GOP leaders will work to resolve their differences in a meeting with Treasury Secretary Scott Bessent later Tuesday. 

After the Dalio meeting, House Budget Chairman Jodey Arrington said he’s resolved to block any Senate tax plan that lacks sufficient spending cuts, saying it would be dead on arrival in the House. But Arrington also acknowledged that the House’s own budget blueprint fails to meet Dalio’s 3% GDP target.  

“This is not something you accomplish in one bill,” he said. “We need to begin exercising the spending cut muscles.”not supported.

Representative David Schweikert, an Arizona Republican, said Dalio’s message means Congress must pass spending cuts to pay for their plans to make President Donald Trump’s expiring 2017 tax cuts permanent as well as any new tax cuts.

Dalio has been warning for some time that the U.S.’s growing debt burden threatens the country’s financial stability, an argument he advances in a forthcoming book: How Countries Go Broke: The Big Cycle.

“We are at a precarious time in what I call the Big Cycle, where there is a confluence of major forces playing out in a way that is similar to many times in history,” Dalio said in a statement released in advance of the meeting. 

Dalio, 75, stepped down as co-CEO of Bridgewater in 2017 and retired from the hedge fund in 2022. He has a net worth of more than $16 billion, ranking 132nd in the Bloomberg Billionaires Index.

McConnell Jones, the largest African American-owned CPA firm, is expanding its geographic footprint as an integral part of its growth strategy.

The firm, based in Houston, acquired Georgia-based Taylor CPA, effective Jan. 1, 2025, as part of this strategy. In 2023, it bought North Carolina-based Thomas & Gibbs, and now it’s in conversation with more firms that are good cultural fits and located in key geographic markets.

“We’re getting two for the price of one here by having offices both in Atlanta and Columbus,” McConnell Jones managing partner Wayne McConnell told Accounting Today about the Taylor acquisition. “It’s a combination of what I see as a really good cultural fit for us, in addition to the geographic expansion.”

D. Jones Photography

McConnell Jones reported $23.4 million in revenue in 2024, with five offices, six partners and 148 employees. Acquiring Taylor adds two offices in Atlanta and Columbus, Georgia. McConnell Jones is a full-service firm, but it specializes in audit and assurance services, including commercial audits, benefit plan audits, federal government audits, public company assurance, state and local government audits, and nonprofit audits.

McConnell said the firm’s federal government contracts have not been impacted so far despite the current presidential administration’s actions. 

“We’re looking to take advantage of the relationships that we have with them to find other areas within their organization that don’t necessarily have to be done by the Big Four,” he said.

In terms of expanding existing service lines, adding Taylor boosts the firm’s client advisory services.

“There’s a reference to CAS 1, the more basic bookkeeping and accounting,” McConnell explained. “But then there’s CAS 2 that is more of a value proposition that you offer to clients, where you’re not just taking care of what has happened historically, but you’re bringing value to the table by assisting them in forecasting, budgeting areas that help them determine what’s going on from an operational perspective so that they’re making good business decisions. So the transaction we just did with Taylor really enhanced our ability to function more effectively in that CAS 2 space”

He also wants to expand the firm’s data analytics capabilities but admitted it’s been a challenging area for growth, both organically and through acquisition, due to his firm’s size and a general lack of interest. 

Open to PE

Like many other midsize firm owners, McConnell said he is open to a private equity investment.

“There’s a lot of lather, I would say, in the private equity space,” he added. “There’s a significant amount of activity going on there, and I think those firms that are looking for capital to invest in talent and infrastructure are looking to do those deals if they meet the metrics and parameters that the private equity guys are looking for. I think it’s an attractive alternative to certain firms.”

McConnell noted that an investment is attractive, in particular, “for more seasoned partners to get a liquidity event done while setting the firm up for the transition from the founders to the next generation.”

“There’s also something to be said for remaining independent, and we feel it’s important to look at all of our alternatives,” he added. “We are a first-generation firm. We have not gone through a turnover from the founders to the next generation of partners, nor have we gone through a sale transaction upwardly. It’s important to look at all alternatives and to see what fits best for your organization.”