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M&A fuels big number of audit errors, analysis finds

Tammy Whitehouse | October 26, 2017

Public company audit deficiencies fell for a second consecutive year in 2015, but still cropped up in nearly one-third of all inspected audits, according to a new analysis.

Valuation and consulting firm Acuitas published its annual analysis of audit inspection reports issued by the Public Company Accounting Oversight Board, finding inspectors flagged deficiencies in 31.6 percent of all audits inspected in 2015. That was a decline from 39.2 percent in 2014 and 42.9 percent in 2013, the firm said.

The analysis also revealed 31 percent of all audit deficiencies stemmed from problems with fair value measurements and impairments, many of those arising as a result of a surge in business combination activity. Of the fair-value-related deficiencies recorded in 2015, 68 percent arose from business combinations, such as mergers or acquisitions, up from 56...

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