Inspections

Doty Scores Visibility to China's Inspection Process

May 09, 2012

U.S. audit regulators will soon be allowed to observe their Chinese counterparts as they inspect firms that audit companies or units of companies that trade on U.S. exchanges, thanks to an agreement struck during a meeting of the U.S.-China Strategic and Economic Dialogue in Beijing earlier this month. Details inside.
 

Grant Thornton Gets Latest Rebuke From PCAOB

May 03, 2012

Add Grant Thornton to the list of major audit firms that have been called on the carpet by the Public Company Accounting Oversight Board for audit failures during inspections of 2010 audit work. The regulator found fault with 15 of the 41 audits by Grant Thornton it reviewed, or 37 percent, including one blown audit that led to a restatement.
 

McGladrey & Pullen Gets Harsh Inspection Report

April 19, 2012

McGladrey & Pullen is the latest major audit firm to take a scolding from the Public Company Accounting Oversight Board. The audit regulator listed multiple problems with nearly half of the audits inspected, according to the firm's latest inspection report. The firm joins nearly all the major accounting firms in getting a public rebuke from the PCAOB for higher audit failure rates.
 

BDO USA Report Cites Common Audit Problems

March 09, 2012

The PCAOB has blasted another audit firm for poor audits. BDO USA, the latest company to get dinged, scored poorly on 26 percent of the audits studied during its 2010 inspection. The failure rate is on par with that of its Big 4 competitors, whom were all recently cited for increased rates of audit failures during 2010 inspections.
 

Fewer Companies Changing Auditors

January 31, 2012

Fewer companies changed audit firms in 2011, reflecting relative stability in the market for financial reporting. While second-tier audit firms made some inroads, picking up a net gain of 28 audit clients, the Big 4 firms saw little turnover, losing a net of only eight clients. Deloitte experienced the most turnover, with a net loss of 22 clients. More audit change analysis and data inside.
 

OCIE Provides Social Media Guidance for Investment Advisers

January 31, 2012

Investment advisers seeking clarity about the appropriate use of social networking Websites such as Facebook, Twitter, and LinkedIn now have some much-needed guidance. The SEC's Office of Compliance Inspections and Examinations has issued a Risk Alert to help them craft and enforce a social media policy. Others worried about social media risks would do well to give it a read, too. Details inside.
 

E&Y Also Sees Jump in Audit Failures in Latest Report

December 22, 2011

Ernst & Young, like other Big 4 counterparts, turned in twice as many deficient audit reports in the most recent year reviewed. The Public Company Accounting Oversight Board found a failure rate of 20 percent for the audits it analyzed. Problems included testing of fair-value measurements and inadequate scrutiny of internal controls.
 

Deloitte, like PwC, KPMG, Seared in Inspection Report

December 21, 2011

Audit firm Deloitte and Touche joined rivals PwC and KPMG on the Public Company Accounting Oversight Board's naughty list. The audit regulator published a report faulting 45 percent of the audits it reviewed from 2010, more than double the rate of problem audits found the year before. Details inside.
 

PwC, KPMG Stung With Blistering Inspection Reports

November 21, 2011

The Public Company Accounting Oversight Board has handed blistering reviews to audit firms PwC and KPMG in their latest inspection reports, flagging a dramatically increased number of failed audits and uncovering problems that led to at least two restatements. For both firms, inspectors noted numerous instances of problems with the testing and disclosures of fair-value measurements and with goodwill impairment.
 

PCAOB Unveils Quality Concerns at Deloitte

October 17, 2011

The Public Company Accounting Standards Board has taken a swipe at Big 4 accounting firm Deloitte & Touche, publishing criticisms of Deloitte's audit supervision, internal enforcement of procedures, lack of skepticism, training programs, and more, in a recently released report based on problems first uncovered in 2007.
 

PCAOB Makes Little Progress on Overseas Inspections

August 05, 2011

The Public Company Accounting Oversight Board has made some progress in negotiating with other countries—including Britain, Switzerland, and China—to complete inspections of overseas audit firms, but it's not having much luck getting those inspections underway. Legal conflicts have delayed nearly all of the inspections planned in 2010 and 2011.
 

French Data Protection Authority Increases Compliance Inspections of U.S. Companies

May 17, 2011

The French Data Protection Authority hopes to do a third more inspections of companies to ensure compliance with French and European Union data privacy regulations. The independent administrative authority is specifically focusing on U.S. companies enrolled in the U.S.-E.U. Safe Harbor Program for these checks.
 

Chinese Reverse Mergers Pose Audit Risk

March 16, 2011

Chinese companies looking to tap into U.S. capital markets are increasingly using reverse mergers with Chinese shell companies. The Public Company Accounting Oversight Board warned U.S. auditors about relying too heavily on China-based firms to do the bulk of the audit work and recently published research on the topic.
 

PCAOB Persists With Inspection Plans Abroad

February 08, 2011

The Public Company Accounting Oversight Board is moving forward with its plans to conduct inspections of overseas audit firms that have operations in the United Sates. The program, buoyed by new latitude under U.S. law and hope for cooperation abroad, will target firms in 31 countries.
 

PCAOB Fires Shot on Audit Issues, Calls for Enforcement

September 30, 2010

Regulators are taking auditors to task over their rigor around some of the accounting issues that proved especially volatile through the economic crisis.The Public Company Accounting Oversight Board has published a report summarizing its observations after inspecting audits performed while credit market seized and the economy plunged into depression. The...
 

PCAOB Begins Negotiations With European Regulators

September 24, 2010

Now that Congress and the European Union have removed a big obstacle to international audit inspections, the Public Company Accounting Oversight Board is trying to forge some new relationships with its counterparts overseas to get back on track.PCAOB spokesman Colleen Brennan said the board is beginning to negotiate with various...
 

PCAOB Publishes Reports on Three Major Audit Firms

August 18, 2010

Audit regulators have published the latest report cards for three more major audit firms—PricewaterhouseCoopers, Grant Thornton, and BDO Seidman—calling out continued problems with valuations, loan loss allowances, revenue recognition, and impairments.For PwC, the PCAOB studied parts of 76 different audits and found fault with nine, or 11 percent of the...
 

SEC Establishes Appeal Process for PCAOB Inspections

August 09, 2010

With no warning or fanfare, the Securities and Exchange Commission has established a formal process for audit firms to appeal the results of an inspection conducted by the Public Company Accounting Oversight Board.The SEC adopted an amendment to its “informal and other procedures” to add a rule that would facilitate...
 

PCAOB Logs No Progress on International Inspections

August 04, 2010

The Public Company Accounting Oversight Board isn’t yet making much headway in catching up on overdue international inspections, but the Dodd-Frank financial reform bill at least clears an obstacle the board has repeatedly blamed for its inability to meet its inspection mandate.The PCAOB published an updated status report on its...
 

PCAOB Questions U.S. Audits for China-Based Companies

July 13, 2010

The Public Company Accounting Oversight Board is warning auditors they need to do more than slap a U.S. opinion on an overseas audit report if they want to remain in the good graces of audit regulators.The PCAOB published a staff audit practice alert based on something disturbing noticed lately while...
 

Second 2010 Big 4 Inspection Report Flags Only Five Audits

July 12, 2010

The Public Company Accounting Oversight Board published its second Big 4 audit report of 2010, criticizing Ernst & Young’s work on only five audit reports.The PCAOB spent a year from late 2008 to late 2009 studying 58 audits at E&Y’s headquarters and 30 of 80 U.S. field offices. The PCAOB...
 

PCAOB Seeks More Detail From New Overseas Audit Firms

June 02, 2010

Working whatever angles it can to get information on overseas audit firms doing business in U.S. capital markets, the Public Company Accounting Oversight Board has published some new requirements it may impose on firms seeking new registrations.The PCAOB added two additional questions and answers to its cumulative Q&A guidance on...
 

PCAOB Names Companies Whose Auditors Are Uninspected

May 19, 2010

The Public Company Accounting Oversight Board is getting more aggressive in exposing audit firms and their clients that are so far wriggling free of the audit regulatory process.The board published a 20-page list of more than 400 companies doing business in U.S. capital markets whose auditors have not yet submitted...
 

PCAOB Report on Deloitte Hits on Current Hot Topics

May 07, 2010

In its first Big 4 inspection report for 2010, the Public Company Accounting Oversight Board gave Deloitte & Touche a long list of audit issues to investigate and correct.The PCAOB spent an entire year, October 2008 to October 2009, camped out at the firm’s headquarters and 30 of its 69...
 

PCAOB Disciplines Grant Thornton Auditors

February 19, 2010

Audit regulators have sanctioned a Grant Thornton engagement partner and staff auditor for failing to flag questionable revenue recognition practices in the 2004 financial statements of a small technology company.Partner Ray O. Westguard, 69, has been barred from being associated with a public accounting firm that is registered with the...
 

European Union, China Resist PCAOB Audit Inspections

February 05, 2010

The Public Company Accounting Oversight Board is getting a little more direct about where it is being denied the access necessary to complete international inspections—and resistance seems most pronounced in the European Union and China.In an effort to be upfront about how far behind the international inspections are falling, the...
 

Non-U.S. Inspection Backlog Poses Risk to PCAOB

December 23, 2009

Inspections of non-U.S. audit firms present a “significant risk” to the Public Company Accounting Oversight Board, with a backlog of incomplete inspection reports dating back to 2006 almost certain to embarrass the board if not resolved soon.That’s the conclusion of a self-assessment of the international inspection program just published by...
 

PCAOB Votes to Delay Some International Inspections

June 26, 2009

U.S. audit regulators have voted an extension for themselves on getting certain international inspections done while they tango with their counterpart regulators in other countries.The Public Company Accounting Oversight Board voted to approve an amendment to its Rule 4003 to postpone for up to three years the first inspection of...
 

PCAOB Puts Countries on Notice: Inspectors Are Coming

April 10, 2009

U.S. audit regulators have put 27 countries on notice that they plan to inspect audit firms under their jurisdiction in 2009, 10 of them countries where the PCAOB has never conducted an inspection before.The PCAOB published the list of countries where they plan to inspect audit firms that are registered...
 

Small Audit Firms Lose Clients After Bad Inspections

February 24, 2009

Smaller audit firms that get dinged in their regulatory inspections generally lose their public audit clients or just drop out of public company auditing entirely, according to recent academic research.Brian Daugherty, assistant professor at the University of Wisconsin, said the smallest audit firms, typically auditing only one public audit client,...
 

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