PCAOB report: Audit deficiencies rise again in 2022

PCAOB report: Audit deficiencies rise again in 2022

The number of audits found to have deficiencies during PCAOB inspections showed another year-over-year increase in 2022, according to a board staff report released Tuesday.

The report said the PCAOB expects about 61% of the 710 audits the PCAOB reviewed in 2022 to have one or more Part I.A or Part I.B deficiencies — up from 55% in 2021 and 44% percent in 2020.

Staff Update and Preview of 2022 Inspection Observations presents aggregate observations from the PCAOB’s inspections of certain public-company audits conducted by 157 audit firms last year.

PCAOB chair Erica Williams called the findings “absolutely unacceptable.”

“Audit firms must make changes to turn things around and live up to their responsibility to investors,” Williams said in a news release. “The PCAOB will continue demanding firms do better, conducting transparent inspections, and bringing strong enforcement actions where appropriate. We are also asking audit committees to hold firms accountable by posing tough questions to their auditors on behalf of investors.”

The report includes questions audit committees should consider in discussions with independent auditors, including:

  • Has our audit engagement been inspected, and, if so, would you share the results? Were there any audit areas that required significant discussions with the PCAOB that did not result in a comment form?
  • Has the engagement partner been inspected on other engagements? If so, what were the results of that inspection?
  • What is the audit firm doing to address overall increased inspection findings?
  • Are there any audit procedures that are unnecessarily complicated or not “straightforward” because management is not providing clear, supportable information?

To comment on this article or to suggest an idea for another article, contact Kevin Brewer at [email protected].

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