Audit regulators have published the latest report cards for three more major audit firms—PricewaterhouseCoopers, Grant Thornton, and BDO Seidman—calling out continued problems with valuations, loan loss allowances, revenue recognition, and impairments.

For PwC, the PCAOB studied parts of 76 different audits and found fault with nine, or 11 percent of the audits it examined. In one instance, the PCAOB said the inspection process led one of the firm’s clients to change its accounting and disclosure practices, though PwC said in its response attached to the report that none of the post-inspection follow-up work led to changes in audit conclusions or restatements of the financial statements.

The PCAOB said PwC failed to properly test the fair value of investment securities or derivatives in four separate audits, leading to insufficient audit evidence to support the audit opinion. Testing problems centered largely around failures to test assumptions and pricing information that was used to value various securities and derivatives, according to the PCAOB’s report.

Inspectors also flogged PwC for failing to check up on audit work performed overseas, an issue the PCAOB raised more recently in a broader practice alert to the entire audit profession. “Issuer G” in PwC’s inspection report had numerous foreign locations accounting for more than 20 percent of the company’s revenue, yet PwC didn’t visit any of those foreign locations or send any if its affiliates in those locations to check up on the reported revenue. Inspectors said the firm put too much faith into the entity-level controls, analytical procedures for a few of the locations, and questions posed to management.

Grant Thornton faced PCAOB scrutiny on 39 audits, with five of those, or 12.8 percent, getting criticism. BDO Seidman’s inspection report noted the PCAOB had issues with eight of the 33 audits studied, for a failure rate of 24 percent.

Inspectors noted that one of BDO’s errors, and more than one of Grant Thornton’s, looked like they could have been material to the client’s financial statements. Both firms said in their response letters that their audit conclusions did not change as a result of the scrutiny and any follow-up audit corrections.

For all three firms, the PCAOB pointed out that auditors had difficulty in meeting the documentation standards of Auditing Standard No. 3, Audit Documentation. The PCAOB often notes in inspection reports that auditors may claim to have performed certain audit procedures, but they’re not in compliance if the work papers do not show adequate documentation of those procedures or other audit evidence to support the audit conclusion.

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