Audit regulators delivered a blistering 2014 inspection report to BDO USA, finding problems in 74 percent of audits selected for inspection, a record high rate among major firms.

Inspectors for the Public Company Accounting Oversight Board selected 23 audits for inspection and found problems in 17 that it considered significant enough that it appeared the firm didn’t do enough work to support its audit opinion. Of the 17 busted audits, 15 contained problems in both the audit of financial statements and the audit of internal control. Two inspected audits involved problems with only the audit of financial statements.

The PCAOB says the audit deficiencies described in the report fell into four major categories: failures to sufficiently test the design or operating effectiveness of controls selected for testing, failures to test controls over or the accuracy and completeness of data or reports produced by the issuer, failures to sufficiently test accounts or portions of accounts to address an identified risk, and failures to sufficiently test assumptions or data used by the issuer in developing an estimate.

As with all reports issued in the 2014 inspection cycle, BDO’s report tallies up the number of deficiencies in complying with specific auditing standard in each audit. The firm racked up 53 separate instances of violating Auditing Standard No. 5, which governs the internal control audit, across the 17 criticized audits. Auditors erred 16 times across 10 audits in their response to risks of material misstatement, the report says.

In its response to the inspection findings, BDO told the PCAOB the firm had evaluated each matter raised by inspectors and had taken appropriate actions under both PCAOB standards and the firm’s policies. “We remain committed to improving our audit performance and our underlying quality control systems,” the firm wrote. “We look forward to continuing to work with the PCAOB on the most effective means of achieving this objective.” 

Across the eight largest audit firms, BDO’s inspection report represents the highest rate of audit deficiencies since the PCAOB began providing data in reports in 2009. BDO also recorded the highest rate of deficiencies among the eight largest firms in 2013, with a rate of 65 percent.

Among those same firms, BDO picked up the largest number of public company clients in 2014, according to data from Audit Analytics, with a net increase of 40 engagements. BDO also scored the biggest increase in new clients in 2013, Audit Analytics said.