The Public Company Accounting Oversight Board today released a report on issues identified in the 2004 through 2006 inspections of US firms that audited 100 or fewer public companies. This is a general report issued under the Board's Rule 4010 and does not identify any firm or firms.
"The report by the Board inspections team provides an instructive set of observations of common issues identified during inspections of these audit firms. Having completed the first inspections of nearly 500 US firms in 2004 through 2006, the Board wants to share this summary information with audit firms to assist them in improving or maintaining the quality of their work," said Mark W. Olson, PCAOB Chairman.
To prepare the report, "The PCAOB’s 2004, 2005, and 2006 Inspections of Domestic Triennially Inspected Firms," the Board reviewed the audit and quality-control deficiencies identified in inspections conducted during this period.
George Diacont, Director of the PCAOB Division of Registration and Inspections, said, "We expect this report to help firms as they evaluate their own work by identifying significant areas where they should strive to ensure compliance with applicable standards and continuously improve their quality control."
The report includes observations in 11 areas where auditing or quality-control deficiencies were observed:
- Related-Party Transactions
- Equity Transactions
- Business Combinations and Impairment of Assets
- Going-Concern Considerations
- Loans and Accounts Receivable (including allowance accounts)
- Service Organizations
- Use of Other Auditors
- Use of the Work of Specialists
- Prohibited Non-Audit Service
- Firm Independence Policies and Procedures and Independence Confirmation with Audit Committees
- Concurring Partner Review