PCAOB Staff Report Shares Observations on How Root Cause Analysis Can Drive Audit Quality

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Apr 30, 2024

On April 30, 2024, the Public Company Accounting Oversight Board (PCAOB) released a new staff Spotlight report, “Root Cause Analysis – An Effective Practice To Drive Audit Quality.

The PCAOB strongly encourages firms to assess the underlying root causes of a deficiency so that the deficiency can be effectively addressed and ultimately remediated and eliminated. Root Cause Analysis (RCA) is used by many audit firms to evaluate the adequacy of and compliance with their quality control system.

The PCAOB staff believes that RCA is an effective practice for firms to drive audit quality. The Spotlight covers:

  • General considerations related to RCA
  • Other observations about RCA from PCAOB inspections
  • Key questions for audit firms to consider

In addition to audit firms, audit committees and others charged with governance may find the firm’s root cause analysis informative as they discuss past inspection deficiencies, the cause of those deficiencies, what corrective actions were taken to address these deficiencies, and what preventive measures a firm has taken to improve their audit quality going forward.

Access the Spotlight report on the PCAOB’s website.

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