McGladrey & Pullen is the latest major audit firm to take a scolding from the Public Company Accounting Oversight Board. The audit regulator listed multiple problems with nearly half of the audits inspected, according to the firm's latest inspection report.

McGladrey joins the company of Big 4 firms PwC, KPMG, Ernst & Young and Deloitte, as well as second tier firm BDO USA, in seeing a jump in the number of audits called out as failures by the PCAOB during the 2010 inspection cycle. Regulators found fault with 9 of the 19 McGladrey audits inspected during 2010, compared with only four audits in the year before. The latest round of inspection reports for major firms shows that audit failures increased by a range of 20 percent for Ernst & Young to nearly 50 percent for McGladrey over prior year failures.

In McGladrey's nine failed audits, inspectors listed numerous failures to secure adequate audit evidence to support the issued audit opinion. Inspectors called out concerns surrounding revenue, valuation of equity instruments and intangible assets, repurchase obligations, contingencies, inventory valuation, fair value measurements provided by pricing services, purchase price allocations related to a business combination, and internal controls.

Inspectors even noted cases where McGladrey auditors identified significant risks, including fraud risks, but failed to adequately address those risks in audit procedures. In at least one case, the inspection finding led to substantial adjustments to the financial statements, according to the PCAOB's report.

In its written response to the report, McGladrey said it has taken action to address the deficiencies identified by the PCAOB, including performing additional audit procedures where necessary or adding more current documentation to the work papers to better explain the procedures, evidence, and conclusions that resulted from the audit process.

McGladrey's latest inspection report is dated Feb. 28, 2012, although it wasn't available online until April 18. Inspectors visited the firms' national office and 13 of its 72 field offices from August 2010 through February 2011 to study the 19 audits of 2009 financial statements selected for inspection. Reports from the same inspection cycle are still pending for Grant Thornton and Crowe Horwath.