PCAOB releases report highlighting deficiencies in the application of its risk assessment standards

  • PCAOB (US Public Company Accounting Oversight Board) (dark gray) Image

Oct 16, 2015

On October 16, 2015, the Public Company Accounting Oversight Board (PCAOB) released a report detailing deficiencies the Board noted during its 2012–2014 inspections of registered audit firms with respect to their implementation of and compliance with the risk assessment standards.

The report found that from 2012 to 2013, the percentage of audits in which deficiencies were noted increased from 26 percent to 27 percent. Further, the preliminary results for 2014 continue to show a high rate of audit deficiencies. Other observations made in the report include the following:

  • “Firms did not perform substantive procedures, including tests of details, that were specifically responsive to fraud risks and other significant risks that were identified. . . .
  • Firms did not perform sufficient testing of the design and operating effectiveness of controls to support their planned level of control reliance, including testing controls over the system-generated data and reports that were used to support important controls or substantive procedures performed in response to the assessed risks of material misstatement. . . .
  • Firms did not evaluate the accuracy and completeness of financial statement disclosures. . . .
  • Firms did not take into account relevant audit evidence that appeared to contradict certain assertions in the financial statements.”

For more information, see the press release and report on the PCAOB’s Web site.

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