A Public Company Accounting Oversight Board (PCAOB) report maintains there has been a year-over-year rise in the number of deficient audits at audit firms the PCAOB inspected last year.
“These findings are absolutely unacceptable, and audit firms must make changes to turn things around and live up to their responsibility to investors,” PCAOB Chair Erica Y. Williams said regarding the Staff Update and Preview of 2022 Inspection Observations analysis. “The PCAOB will continue demanding firms do better, conducting transparent inspections, and bringing strong enforcement actions where appropriate. We are also asking audit committees to hold firms accountable by posing tough questions to their auditors on behalf of investors.”
According to the PCAOB report, staff expects approximately 40 percent of the audits reviewed to have one or more deficiencies that will be included in Part I.A of the individual audit firm’s inspection report, representing an increase from 34 percent in 2021 and 29 percent in 2020.
Additionally, the PCAOB maintains its examination determined some audits have both Part I.A and Part I.B deficiencies, with PCAOB staff expecting approximately 61 percent of the 710 audits the PCAOB reviewed in 2021 will have one or more Part I.A and/or Part I.B deficiencies, a rise from 55 percent in 2021 and 44 percent in 2020.
The PCAOB indicated the 2022 update and preview report also highlights questions audit committees should consider in discussions with independent auditors in the wake of increased PCAOB inspection findings.