In its first published report from the 2011 inspection cycle, the Public Company Accounting Oversight Board found fault with a dozen KPMG audits, the same number it criticized the year before.

The board inspected 52 audits performed by KPMG, plus an additional audit where the firm contributed to the audit effort but was not the principal auditor. From November 2010 through October 2011, the PCAOB inspectors visited 31 U.S. field offices and KPMG's national offices to study audits where it believed it was most likely to find problems.

In the prior year, when audit failures jumped for all the major firms, KPMG's numbers were almost identical. Inspectors studied 52 audits and an additional two audits where the firm was not the principal auditor, and it picked apart and criticized 12 audits, for a failure rate of 22 percent. In 2009, the board found fault with only eight of the 60 audits it studied.

Inspectors studying 2011 audit focused heavily on areas that have often been criticized across the profession over the past few years. The report notes in some instances that the inspection process and follow-up between the firm and the client led to changes in the company's accounting or disclosure practices, although the report doesn't note how frequently that occurred.

The report cites problems with allowances for loan losses, business combinations, fair value measurements, accounts receivable, revenue recognition, yields and cash flows associated with troubled loans. It also calls out instances where the firm relied too heavily on external pricing sources or other evidence to support securities prices, even when it found evidence to suggest the prices might be wrong.

James Liddy, KPMG vice chair for the firm's audit practice, attached a response to the KPMG report. “We conducted a thorough evaluation of the matters identified in the draft report and addressed the engagement-specific findings in a manner consistent with PCAOB auditing standards and KPMG policies and procedures,” he wrote. The firm does not challenge any PCAOB findings in its written response.

The KPMG report is the first 2011 report to be published for the largest firms that are inspected annually. Firms took a beating in the 2010 inspection season, with negative findings jumping considerably for all firms. PCAOB Chairman James Doty has said the 2011 inspection reports will read much the way 2010 reports appeared, citing numerous audit failures with consistent themes.