The recently published results of limited inspections by the US Public Company Accounting Oversight Board highlighted significant oversights by the firms and raised concerns over some of their audit work.
The PCAOB admitted the firms had been co-operative and willing to change practice. But some of the firms felt the one-sided nature of the reports was unfair.
PricewaterhouseCoopers said that it was worried that ‘by concentrating on a relatively few number of identified issues’, the report did not adequately portray the overall high level of audit quality’.
The firm added that there was no ‘baseline assessment’ of its audit quality included in the report.
Deloitte called for the inclusion in the report of instances where the PCAOB inspectors identified areas of best practice that ‘were deemed sufficiently beneficial to audit quality to be mentioned in the staff’s written comments’. Such inclusions it argued ‘would bring some sense of balance to the report’.
Other firms hinted that elements of the PCAOB inspections were perhaps a little overzealous in their bid to find fault. KPMG highlighted an incident where the firms and the inspectors could not agree on the appropriate application of US GAAP after a query raised by the PCAOB.
Consultation with the Securities and Exchange Commission saw the regulator side with KPMG on the matter but highlighted a different element which resulted in a restatement by the audit client.
Despite performing additional procedures and preparing additional documentation at the request of the inspectors, Ernst & Young argued that ‘these actions were not needed to comply with PCAOB standards.’
Go to www.accountancyage.com/news/1138024 for more on PCAOB criticisms.
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