PCAOB report lists 11 top audit concerns

WASHINGTON, Oct. 22, 2007 – The Public Company Accounting Oversight Board has released a report on issues identified in the 2004 through 2006 inspections of U.S. firms that audited 100 or fewer public companies.

This is a general report issued under the PCAOB's Rule 4010 and does not identify any firm or firms.

Download the report here.

“The report by the PCAOB inspections team provides an instructive set of observations of common issues identified during inspections of these audit firms," said PCAOB Chair Mark W. Olson. "Having completed the first inspections of nearly 500 U.S. firms in 2004 through 2006, the PCAOB wants to share this summary information with audit firms to assist them in improving or maintaining the quality of their work,”

To prepare the report, The PCAOB’s 2004, 2005, and 2006 Inspections of Domestic Triennially Inspected Firms, the PCAOB reviewed the audit and quality-control deficiencies identified in inspections conducted during this period.

“We expect this report to help firms as they evaluate their own work by identifying significant areas where they should strive to ensure compliance with applicable standards and continuously improve their quality control,” said George Diacont, director of the PCAOB Division of Registration and Inspections.

The report includes observations in 11 areas where auditing or quality-control deficiencies were observed:

Revenue
Related-party transactions
Equity transactions
Business combinations and impairment of assets
Going-concern considerations
Loans and accounts receivable (including allowance accounts)
Service organizations
Use of other auditors
Use of the work of specialists
Independence
- Prohibited non-audit services
- Indemnification
- Firm independence policies and procedures and independence confirmation with audit committees
Concurring partner review

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