If a CPA firm has knowingly prepared misleading financial statements for a second time, what is the maximum administrative penalty?

The maximum administrative penalty for a CPA firm that knowingly prepares misleading financial statements for a second time is indeed $5,000,000. This high penalty reflects the serious nature of misleading financial reporting, as it undermines the trust and integrity essential in the field of accounting and impacts stakeholders relying on accurate financial information.

When a CPA firm engages in unethical behavior, especially repeatedly, regulatory bodies impose substantial penalties to deter such conduct and maintain public confidence in the accounting profession. The significant financial repercussions underscore the CFA's commitment to upholding ethical standards and ensuring accountability among firms in the industry. Consequently, the substantial maximum administrative penalty serves both as a punitive measure for the wrongdoing and as a warning to others in the profession about the consequences of unethical practices.