THE INSPECTIONS
Section 104 of Sarbanes-Oxley requires the PCAOB to conduct a continuing program of inspections of registered public accounting firms. The Board prepares a written report concerning each inspection, a portion of which is available to the public:
Ahearn, Jasco + Company, P.A.
Anton Collins Mitchell LLP
Armando C. Ibarra
Battelle & Battelle LLP
Clyde Bailey, P.C.
Cohen McCurdy Ltd.
Dudley, Hopton-Jones, Sims, Freeman
Freeman, Buczyner & Gero
Gallogly, Fernandez & Riley
Gelfond Hochstadt Pangburn, P.C.
Joseph A. Don Angelo
KBA Group LLP
Larry O'Donnell, CPA, P.C.
Miller and McCollom, CPAs
Moore Stephens Frost, PLC
R.A. Fredericks & Co LLP
Ramirez International
Randolph Scott & Company
Richard L. Brown & Company, P.A
Salberg & Company, P.A.
Saslow, Lufkin & Buggy, LLP,
Sarna & Company
Tamas B. Revai, CPA
Windes & McClaughry
Related Coverage
British Report Finds Flaws In Big Four Auditing Practices (June 2005)
Where Are PCAOB Inspection Reports? Only Nine So Far (June 2005)
PCAOB Inspections Reveal Problems; Board Way Behind (Feb. 2005)
PCAOB Issues Long-Awaited Report On Big Four (Aug. 2004)
The Public Company Accounting Oversight Board has posted another handful of inspection reports of some of the tiniest accounting firms registered with the Board to audit financial statements for public companies—nearly all of which point out some measure of audit deficiency or quality control problem.
Still under wraps, however, is the Board’s analysis of Big Four service to Fortune 500 companies—except for regulators’ inadvertent revelation last week that Deloitte & Touche is under investigation for its 2003 audit of Navistar International Corp.
The Securities and Exchange Commission, the PCAOB, and Deloitte were silent last week as press reports indicated a document authorizing the investigation was misdirected to SEC’s public file. “We cannot confirm or deny whether an investigation is under way,” a PCAOB spokesman told Compliance Week.
According to reports, the investigation focuses on whether Deloitte violated SEC and PCAOB rules in checking for fraud, performing work in a professional manner and preparing reports on financial statements.
In late June, the PCAOB posted the results of 15 inspections, all small firms auditing only a handful of public companies. Virtually every inspection report described audit deficiencies such as departures from Generally Accepted Accounting Principles or failures to properly document procedures. Many noted undisclosed quality control problems as well, giving firms 12 months to correct problems before disclosing them publicly in accordance with Board inspection rules.
Observers say the reports mean little to the audit and finance communities that are awaiting meaningful inspection results to gain perspective and insight into PCAOB’s areas of inspection focus.
Ciesielski
“Reports on audit firms of this size aren’t going to create a lot of interest,” said Jack Ciesielski, owner of advisory firm R.G. Associates. “That doesn’t make the PCAOB wrong to inspect them. Schlocky financials in small companies is not something that should be allowed to exist any more than in large companies.”
It begs the question, however, “What’s the PCAOB doing at the upper end of the food chain? Will they have reports on the Big Four anytime soon?” Ciesielski said.
Anne Marchetti, practice director for Parson Consulting, said the PCAOB is proceeding conservatively. “They’re giving as little information as they can get away with,” she said. With a handful of inspection reports pointing out scattered deficiencies, “we could start to see a little more discussion about deficiencies,” she said. “Now it could get interesting.”
IFAC, IAASB Issue New Rules, Guidance For Accountants Globally
The International Federation of Accountants and its International Auditing and Assurance Standards Board have been abuzz with new rules and guidance since late June. The IFAC issued its newly revised Code of Ethics for Professional Accountants while the IAASB has issued a new standard on reviewing interim financial information and proposed separate new standards on reporting on historical financial information and reporting on summary audited financial statements.
IFAC is a global accountancy group representing 2.5 million accountants in 119 countries. Its revised code of ethics establishes a framework to assurance compliance with five fundamental principles—integrity, objectivity, professional competence and due care, confidentiality, and professional behavior.
The Federation’s IAASB seeks to bolster audit standards and help facilitate convergence of accounting rules among various national systems. In developing its standards, the Board takes into consideration the regulatory and standard-setting developments of countries all over the world. Its latest work, a new standard on reviewing interim financials, the Board’s rule closely follows a comparable standard from the American Institute of Certified Public Accountants, said Denise Esdon, deputy chair of the IAASB.
All related documents are available from the box above, left.
No comments yet