- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Kyle Brasseur2023-07-25T18:15:00
A steady increase in the rate of deficiencies observed by the Public Company Accounting Oversight Board (PCAOB) during audit inspections the past three years has the head of the agency calling on firms to “make changes to turn things around and live up to their responsibility to investors.”
PCAOB Chair Erica Williams released a statement Tuesday in which she described the trend as “completely unacceptable.” The PCAOB is projecting approximately 40 percent of the audits its inspectors reviewed in 2022 will have one or more Part I.A. deficiency, meaning a firm did not obtain sufficient appropriate audit evidence to support its opinion on a public company’s financials and/or internal control over financial reporting.
The deficiency rate is up from 34 percent in 2021 and 29 percent in 2020, the agency said in a press release. Of note, the agency is now reviewing the audits and publishing inspection reports from firms in China and Hong Kong, its first batch of which returned significantly high deficiency rates.
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Three of the Big Four audit firms saw increases to the deficiency rates observed in their latest Public Company Accounting Oversight Board inspection reports, while KPMG had its results redacted.
Rule amendments proposed by the Public Company Accounting Oversight Board would enable the agency to penalize individual auditors more easily when their conduct is deemed to have contributed to violations by their firms.
The Public Company Accounting Oversight Board announced a $125,000 penalty against India-based audit firm K G Somani & Co. for alleged violations of quality control standards.
Erica Williams was reappointed to a second term as chair of the Public Company Accounting Oversight Board after an ambitious first three years in the role that have seen the agency work to update many of its standards deemed outdated.
Software company Autodesk said it won’t restate several years of financial statements following an audit committee investigation into potential accounting misconduct.
Los Angeles-based bank holding company Broadway Financial Corp. disclosed in a public filing weaknesses discovered in its internal control over financial reporting because of training shortfalls.
