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Audits Failures Linked to Execution, Not Process Problems

Tammy Whitehouse | December 10, 2014

Audits fail not so often because the firm’s process was flawed, but because individual auditors or engagement teams fail to adhere to firm methodologies, according to Jay Hanson, a member of the Public Company Accounting Oversight Board.

Hanson-jay-1014At a national accounting conference on regulatory issues, Hanson said he sees much more context around audit failures than the board is able to relate in its inspection reports, and he’s pushing for more PCAOB analysis to identify the root causes of audit failures. Board members have greater visibility into what goes wrong in audits, he said, and he observes it’s more often a problem with auditors executing on firm methodologies. “I can ask: did the firm miss it overall, so any diligent auditor following their...

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