PCAOB Issues Report on Inspection Observations Related to Audits of Internal Control over Financial Reporting

The Public Company Accounting Oversight Board today released a report summarizing inspection observations related to deficiencies in registered public accounting firms' audits of the internal control over financial reporting (ICFR) at public companies.

"The report reflects the Board's commitment to inform auditors, audit committees, and the investing public about significant issues identified in our inspection program," said James R. Doty, PCAOB Chairman. "Firms should take note of the matters identified in the report in planning and performing their audits."

The report, "Observations from 2010 Inspections of Domestic Annually Inspected Firms Regarding Deficiencies in Audits of Internal Control over Financial Reporting," provides information about the nature and frequency of deficiencies in firms' audits of internal control over financial reporting detected during the PCAOB's 2010 inspections of eight domestic registered firms that have been inspected every year since the PCAOB inspection program began.

The report is based on PCAOB inspections that examined portions of approximately 300 such audits. It describes the most pervasive deficiencies identified in those audits and also includes information on the potential root causes of the deficiencies.