2015 audit inspections show some gains, some blown opinions

In the public’s first view of the results of audit inspection performed in 2015 on 2014 financial statements, the Public Company Accounting Oversight Board reveals some indicators of improvement, but some troubling signs as well.

At PwC, where inspectors selected 55 engagements for inspection and found problems in 12, the firm’s 22 percent deficiency rate for 2015 represents an improvement over the 2014 rate of 29 percent. At the same time, however, two of the firm’s 12 deficient audits ended up in restatement after the PCAOB spotted problems, and PwC revised its opinion on internal control in six cases.

That means at least half of the PwC audits flagged by the PCAOB had failures so serious the audit opinion itself was not even reliable. PwC has had similar problems in earlier years. After its 2014 inspection, one PwC client restated and the firm issued four revised opinions on...