PracticeAccounting FirmsBig Four to face yearly US inspections

Big Four to face yearly US inspections

Big Four firms in the US will face yearly inspections by the new US audit watchdog, its chairman has told a gathering of accountants in New York.

Link: PCAOB releases registration list

William McDonough, chairman of the Public Company Accounting Oversight Board, said firms with one hundred or more audit clients would face yearly inspections, while all other firms would be inspected every three years.

He also warned that, where circumstances warranted it, the PCAOB would have the power to order an inspection regardless of timing.

In a speech to the Foundation for Accounting Education in Manhattan, McDonough said the PCAOB would vote later this month on its inspection rules, but said limited inspection procedures had already begun.

Yesterday, the PCAOB opened its office in New York where it will be working on the limited procedures at the Big Four.

And he warned those present: ‘We’re going to look for compliance required in the Sarbanes-Oxley Act, that is, compliance with the act, the rules of the board and the Securities & Exchange Commission and professional standards.

He added: ‘The board and our inspectors want to know if the message of doing the right thing is reaching the rank and file in your firms. Our inspectors will talk to the managers, but they will also talk to the least experienced members of your audit teams to find out if the message is reaching them. We will look at how often and how well the message is delivered.’

Also at the meeting he reminded anyone who audited a public quoted company that they had to register with the PCAOB to continue doing such work.

The registration date falls on 22 October, but as Sarbanes-Oxley allows the PCAOB 45 days to consider all applications, they should have been received two days ago.

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