January 20, 2019

PCAOB

The Person At the PCAOB Who Auditors Feared the Most Is Now Their Friend

In an interesting turn of events, Claudius Modesti, who was the head enforcer at the Public Company Accounting Oversight Board for 14 years before leaving last May, will now be defending audit firms that run afoul of the PCAOB and the Securities and Exchange Commission in his new role with law firm Akin Gump Strauss […]

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Deloitte’s 2017 PCAOB Inspection Report Is Pretty Not Shitty

You know, when I sat down to start writing this, I contemplated some clever headline, perhaps something about a veritable smorgasbord of audit screw-ups, but then I was like, you know what, nah. We should recognize that Deloitte has posted its lowest audit deficiency rate ever, which is something worth applauding even if the fuck-up rate […]

PCAOB Hands the Keys to Chief Auditor’s Office to Deloitte’s Megan Zietsman

The Public Company Accounting Oversight Board has been without a full-time chief auditor and director of professional standards since the end of May, when Martin Baumann resigned after spending nine years in that role and 12 years at the PCAOB. For the past six months, Deputy Chief Auditor Barbara Vanich has filled that position on […]

Former PCAOB Chief Auditor Martin Baumann Backs Out of IAASB Gig

Last month, we reported that Martin Baumann, the former chief auditor and director of professional standards at the Public Company Accounting Oversight Board, was going to be the next chair of the International Auditing and Assurance Standards Board. But due to “unforeseen personal circumstances,” he’s decided not to take the job. In a statement, Baumann […]

Ex-KPMG Partner Pleads Guilty to Using Stolen PCAOB Inspection Information

The former national partner-in-charge of inspections at KPMG pled guilty on Oct. 29 for his involvement in a scheme in which the Big 4 firm repeatedly used stolen confidential Public Company Accounting Oversight Board information to cheat the regulatory inspection process. Thomas Whittle, 55, pled guilty to wire fraud and conspiracy charges, pursuant to a […]

Ex-KPMG Executive Director Admits Guilt in PCAOB Inspection Leak Scandal

A former Public Company Accounting Oversight Board inspector-turned-KPMG executive director, who was accused of obtaining confidential information on which KPMG clients’ audits the PCAOB would be reviewing so the Big 4 firm could improve its dismal inspection results, pleaded guilty in Manhattan federal court on Oct. 16 for her involvement in the scandal. Cynthia Holder, […]

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PCAOB Fines Deloitte Canada $350,000 for Breaking Independence Rules Thrice on Audits of Banro

Deloitte Canada scored a hat trick of sorts on Oct. 16, but I doubt it was celebrated among the firm’s management. The firm was censured and fined $350,000 by the Public Company Accounting Oversight Board on Tuesday for failing to maintain independence during its 2012, 2013, and 2014 audits of Canadian gold-mining company Banro Corp. […]

Thumbs down BDO LLP

Those Who Know, Know BDO … Sucks at Auditing

So, the latest PCAOB inspection report of BDO USA is out, and man, it’s bad. You know it’s bad when even KPMG can do better. Well, at least according to the most recent available report, we’re still waiting on the suspiciously absent 2016 KPMG PCAOB inspection report. Anyhoo, back to BDO. They’re no strangers to […]

Martin Baumann Found a Job at Another Auditing Standard-Setter With a Five-Letter Acronym

Nearly four months after he left his position of chief auditor and director of professional standards at the Public Company Accounting Oversight Board (PCAOB), Martin Baumann has a new gig: chair of the International Auditing and Assurance Standards Board (IAASB). Baumann, who was appointed to a three-year term that begins on Jan. 1, 2019, replaces […]

Where, Oh Where, Is KPMG’s 2016 Inspection Report?

KPMG’s 2016 inspection report has still not been published by the Public Company Accounting Oversight Board, and the PCAOB won’t say why—or if the report will ever see the light of day. Compliance Week reports: The Public Company Accounting Oversight Board published its 2016 inspection results for Deloitte in December 2017 followed by reports for EY […]

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Federal Judge Strikes Down Ex-KPMG Partners’ Request for SEC Evidence Search

If you’re dying to know what’s going on with David Britt, David Middendorf, and Thomas Whittle, the former KPMG partners who are accused of participating in a scandal in which confidential Public Company Accounting Oversight Board inspection information was leaked to the accounting firm, Law360 has an update: A group of former and would-be KPMG auditors […]

PCAOB Told SEC ‘Hold My Drink,’ Went All Enforcement-Crazy on Accountants in 2017

2017 was a banner year for the Public Company Accounting Oversight Board when it came to enforcement actions against accountants. For the Securities and Exchange Commission, not so much. The PCAOB finalized 35 enforcement actions involving “accountants”—otherwise known as CPAs employed by SEC registrants, auditors, and audit firms—last year, up from 28 in 2016, according […]

Broker-Dealer Audits Are Still Sloppy, But Hey, Auditor Independence Violations Are Down, So That’s Something

The Public Company Accounting Oversight Board released its report on 2017 inspections of broker-dealer audits on Aug. 20, and once again, there was some disappointing news for those who champion audit quality. According to a PCAOB press release: In this inspection period, the PCAOB inspected 75 audit firms and reviewed portions of 116 audits and […]

If You’re Really Big Into Commenting on Five-Year Strategic Plans, the PCAOB Wants to Hear From You

It’s been a slow day around GC HQ, and the weekend is almost here. But before we go, here’s a riveting article on the Public Company Accounting Oversight Board’s draft of its five-year strategic plan, which is now open for public comment. In a nutshell, a survey was sent out last April asking investors, auditors, […]

Michael Stevenson Latest to Bid Adieu to the PCAOB

Another one bites the dust. This time it’s Michael Stevenson, longtime Public Company Accounting Oversight Board deputy general counsel. Stevenson, who joined the PCAOB in 2003, had served as deputy general counsel since March 2007, according to a July 24 PCAOB press release that announced his departure. During that time, Stevenson “provided legal counsel in […]

Setback in Court For Ex-KPMG Execs, As Judge Refuses to Toss Out Counts in PCAOB Inspection Info Leak Case

As Mick Jagger sings, “You can’t always get what you want.” What three former top KPMG executives and two former employees of the Public Company Accounting Oversight Board—who are accused of participating in a scheme in which confidential PCAOB inspection information was shared with the accounting firm—wanted was for their conspiracy and wire fraud counts […]

KPMG Used Confidential Inspection Info to Snatch BBVA Away From Rivals, Report Says

If you missed this late last week, Francine McKenna of MarketWatch detailed how KPMG used access to confidential Public Company Accounting Oversight Board inspection information to poach a client from its Big 4 rivals. The client, Spanish bank BBVA, was one of nearly a dozen KPMG clients caught up in the audit inspection scandal. Others […]

Report: Court Documents Name KPMG Audit Clients Caught Up in PCAOB Leak Fiasco

MarketWatch reporter and friend of Going Concern’s, Francine McKenna, wrote an outstanding article today after digging through court documents obtained by MarketWatch that name the audit clients caught up in the KPMG audit inspection conspiracy. And there are some pretty big names. The Justice Department in January brought criminal charges against five former KPMG executives […]

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We Might Have New PCAOB Member Nominees Soon, Someday, Maybe

Just keeping it warm. Dave Michaels reports at The Wall Street Journal that SEC Chairman Jay Clayton’s preferred choice to lead the PCAOB is rumored to be the same person everyone thought it would be: SEC Chairman Jay Clayton wants William Duhnke to become the PCAOB’s next chairman, according to one of the people familiar […]

Big 4 Auditors Are Probably Looking Forward to More Amiable PCAOB

Michael Rapoport reports in the Wall Street Journal on the waning James Doty era at the PCAOB and that he will probably exit with unfinished business: Mr. Doty, chairman of the Public Company Accounting Oversight Board, may only have months left to pursue his wish list, including a change that would require auditors to tell […]

PCAOB Inspectors Find IT Auditors on the Struggle Bus

In case you missed the news earlier this month, all of the PCAOB reports are out for the Big 4's 2015 cycle of inspections. What schadenfreude awaits us? Let’s take a look. Big picture — regarding overall deficiency rate — PwC is the winner this year. Even if PwC is only slightly ahead, the firm […]

Exposure Drafts: It’s PCAOBeginning To Look A Lot Like Christmas

Exposure Drafts appears every other Wednesday. Send comments and suggestions to [email protected]

Deloitte’s Brazil Firm Covered Up a Couple of Bad Audits

The big news in the international audit firm world today is an announcement by the PCAOB that Deloitte’s Brazil firm audited badly and then covered up that bad auditing, which is also bad. The whole thing involved a dozen auditors including the Brazil firm’s former Audit Practice Leader, former Risk and Reputation Leader and former […]

The Trump Administration Will Drain the PCAOB Swamp

The election of Donald Trump is likely to transform the Public Company Accounting Oversight Board (PCAOB). While the PCAOB is technically a non-partisan private regulator, it will not likely escape Trump’s commitment to drain the swamp. Jim Doty’s term as PCAOB chairman expired in October of 2015. The PCAOB chairman is nominated by the SEC […]

PCAOB Unsure About Motives Behind Audit Firms’ Fancy New Thingamajigs

The Big 4 has been attempting to bring sexy back to auditing for awhile now, with leaders talking about innovation this and technology that, data this and 100% testing that. And that's cool, auditing needed the confidence boost, since advisory's been strutting around getting all the attention for the last decade. So yeah, we've noticed […]

Comp Watch ’16: PCAOB

PCAOB Chairman James Doty had the pleasure of presenting a budget to the SEC today and it probably could've gone better. I'd say that any time you're asking people for money it can be a little nerve-wracking, but this is the federal goverment! There's virtually no chance that you won't offend someone no matter how […]

PCAOB Unanimously Approves Auditor Disclosure Rule

Update below specifies the timing of the rule’s effect. As promised, the PCAOB is dropping its auditor disclosure rule with 9 shopping days left until Christmas. It's been quite a haul as the Board has been working this project since 2008 after the Treasury Department's Advisory Committee on the Accounting Profession recommended that audit partners […]

Learn All About Being a PCAOB Inspector From the Director Inspections

Awhile back, we solicited questions from you all about what a career at the PCAOB as inspector might be like. It took some time (I blame myself!) but we've managed to get our interview with Helen Munter, the PCAOB's Director of Registration and Inspections pulled together. First, some housekeeping: The Board video-recorded this interview between […]

More Twists in the Race to Be The Next PCAOB Chairman

John White, a prominent lawyer with Cravath, Swaine & Moore, sits on the PCAOB's Standing Advisory Group. His wife, Mary Jo, chairs the SEC. She, along with the other commissioners, will choose the next PCAOB chair. Some people don't like how that looks: The Center for Effective Government, an advocacy group, said White should step […]

PwC Out of the Running for This Year’s “Worst Performance By a Big 4 Audit Firm”

The PCAOB, bless their hearts, released a forgettable inspection report from PwC today. The deficiency rate, 29%, is still in the range we're used to, but was lower than last year, so that's something. Michael Rapoport reports that this deficiency rate is better than EY's (36%) but not as good as Deloitte's (21%) and that […]

PCAOB Going with Plan C for Naming Audit Partners

In a speech given yesterday, PCAOB Chairman James Doty said that the Board will seek comment on a third proposal for naming the lead audit partner. Doty recounts the journey so far, including the concept release that "consider[ed] engagement partner signature in 2009," the proposal for "mere disclosure" in 2011 that they sought comment on […]

PCAOB Was Born That Way

At the Wall Street Journal's CFO Network event yesterday, a nameless CFO asked SEC Division of Corporate Finance, Keith Higgins, “What gives with the PCAOB? Do they really mean to be slow and not transparent?” Although Mr. Higgins acknowledged that, "We've heard that concern," the correct answer is, "Yep! That's how audit firm lobbyists designed it!" […]

Senators Taking Another Crack at Making PCAOB Proceedings Public

Senators Jack Reed (D-RI) and Chuck Grassley (R-IA) introduced a bill in 2011 that would make PCAOB disciplinary proceedings public. Like many bills in this political climate, it went precisely nowhere. Reed and Grassley, not unfamiliar with the excruciating pace of the legislative process, are gonna try to get some momentum behind this idea again […]

What Career Questions Do You Have for the PCAOB’s Director of Inspections?

As we've discussed, it's time for you to look for a new job; yes, even if you're not interested in leaving your current gig. For the auditors out there, you may or may not have considered the possibility of joining the PCAOB. While the mere mention of the Board causes some auditors to fly into […]

PCAOB Inspection Report Gives Grant Thornton Another Swift Kick in the AS5

Just when you thought, "Boy, it's been awhile since I've seen a terrible PCAOB inspection report," here comes the PCAOB with a terrible inspection report. It's like Christmas! Well, for those of us who find this entertaining, anyway. For Grant Thornton, not so much. Out of reviews of portions of 36 audits, PCAOB inspectors found […]

SEC Tired of Telling the PCAOB How to Do Their Job

Colin buried this one in ANR this morning but let's trot it out into the light where it belongs. Michael Rapoport writes for the Wall Street Journal: Renewing criticisms from December, SEC officials said the Public Company Accounting Oversight Board should be focusing on enacting rules governing the nitty-gritty of how auditors do their jobs. […]

Let’s Speculate Wildly as to Why the PCAOB Delayed Its Budget Meeting

So, this happened: The Public Company Accounting Oversight Board today announced that it is postponing consideration of its budget for the 2015 fiscal year and the related strategic plan.  The Open Meeting for Thursday, November 20, is cancelled. Action on the budget and related strategic plan will be rescheduled later this month. Section 109(b) of […]

PCAOB Says Audit Failures Are No Longer Audit Failures

So, today, this happened: Hanson says the PCAOB has moved away from using the phrase "audit failures" in the boilerplate parts of its inspection reports. #FEICFRI14 — Accounting Today (@AccountingToday) November 18, 2014 You'll recall earlier this year, we pointed out new-ish language in PCAOB inspection reports that clarifies the definition of an audit deficiency. […]

The PCAOB May or May Not Be Trying to Stir the Pot

Edith Orenstein wondered out loud yesterday on FEI if the PCAOB is returning to its activist agenda of yore. Short of Jim Doty occupying the audit room with a bullhorn and a sign, what exactly does an "activist" PCAOB look like? She writes: Although the PCAOB dropped its proposal for audit firm rotation, the audit […]

McGladrey’s PCAOB Inspection Report Is the Least Embarrassing Thing About McGladrey

We were too busy yesterday making AS5 jokes about KPMG to talk about McGladrey's 2013 PCAOB inspection report, which was released at the same time. McGladrey is used to warming the bench over Big 4 firms so we figured they could wait for us to get around to it. The news is pretty good, at […]

The PCAOB Is Considering Naming Partners In a Separate Partner Naming Form

We're still on this, apparently, and the PCAOB isn't letting up. In an attempt to satisfy stakeholders, curious accounting tabloids, and industry lobbying groups and the firms they serve, the PCAOB is floating the idea of a new form that exists solely for the purpose of naming partners. "Form 5" would be filed shortly after […]

Save the Date: PCAOB Investor Advisory Group meeting October 20

This just in! The Public Company Accounting Oversight Board today announced that it will hold a meeting of its Investor Advisory Group on Wednesday, October 20, 2014. Topics that the IAG will present to the Board include: ·         The audit firm business model and incentives ·         How to improve audit quality and the relevancy of […]

Let’s Argue Over the Best Place to Put Audit Partners’ Names on Reports

You may have noticed an important article Colin shared in ANR this morning, one which explains the most contentious issue in accounting today (besides the GC most overrated list). From Michael Rapoport over at the Wall Street Journal: The Public Company Accounting Oversight Board, the government's audit regulator, expects to give final approval in the […]

PCAOB Issues Staff Audit Alert on Auditing Revenue Because Auditors Suck at Auditing Revenue

The PCAOB would like to see auditors get better at a lot of things; showing their work, testing controls, auditing in general. In particular, they would like to see auditors get better at auditing revenue because revenue is so dang important to the big picture here, people. "Revenue is one of the largest accounts in […]

The PCAOB Has Added Some Interesting New Language to Inspection Reports

While we were ragging on EY yesterday for taking it up the AS5 from the PCAOB, we happened to notice some interesting new language in the inspection report. Now, this is not surprising as the PCAOB clarifies itself often, but let's see what you think about this: Certain of the deficiencies identified were of such […]

Audit Partners Will Definitely Be Named, We Just Don’t Know Where or How

This from ProPublica: In a letter dated August 15, Jeff Mahoney, the general counsel for the Council of Institutional Investors, a nonprofit that represents investment organizations with more than $3 trillion in assets under management, wrote, "to express our surprise and disappointment in the report earlier this week in the New York Times that the […]

According to This, Audit Partner Naming Is No Longer on the PCAOB’s To Do List

We found an interesting bit in a DealBook piece about Mary Jo White's impotent SEC we felt would be important to share with you: On yet another front, the S.E.C. is embroiled in a quiet battle with the Public Company Accounting Oversight Board, the accounting industry regulator created after the Enron-era scandals. The accounting board […]

PCAOB Settles With PwC Partner Who Screwed Up the ArthroCare Audit

Let this case serve as a lesson to all partners in charge: if you don't do good audits, you will be bankrupted and sent to prison for criminally negligent auditing. Oh wait, no you won't. Carry on: The Public Company Accounting Oversight Board today announced a settled disciplinary order against Randall A. Stone, CPA, of […]

PwC Slightly Better at Auditing This Year, Says PCAOB Inspection Report

Rejoice, people, PCAOB Inspection Report season continues! From PwC's fresh off the presses 2013 inspection report: The 2013 inspection of the Firm included reviews of portions of 57 audits performed by the Firm and reviews of the Firm's audit work on two other issuer audit engagements in which the Firm played a role but was […]

Grant Thornton Fails to Take Up the PCAOB’s Offer to Get Better at Auditing

The good news for Grant Thornton is that they managed to take remedial actions related to their 2010 inspection report and addressed criticisms to the satisfaction of the PCAOB. Cheers!  The bad news is that the same cannot be said for their 2008 and 2009 reports. The quality control remediation process is basically a way […]

PCAOB Adopts Auditing Standard No. 18: Crony Disclosures

Let us welcome into the world a new auditing standard:

PCAOB: Audit Firms Missing the Point of Auditing

Audit firms are still having some trouble pleasing the audit overlords at the PCAOB — particularly with Auditing Standard No. 5. ICFR is the new WTF, though the PCAOB sees audit firms making progress. Unfortunately, the firms are also kinda missing the point of this whole exercise. Compliance Week has the details: The next round […]

The PCAOB Has a Flickr and It’s Everything You’d Expect it to Be

Earlier today when I was pulling a press release off my fifth most visited website after GC, the Daily Mail, Facebook, and perhaps a tube that shall remain unnamed, I noticed the fancy little icons at the top of the page letting me know that the PCAOB has a Flickr account. Perplexed, I immediately gchatted […]

The PCAOB Is Looking For a Few Good SAGs

Full press release is below as we don't care enough about this to spend an hour rewriting it: Washington, DC, May 1, 2014 — The Public Company Accounting Oversight Board is soliciting nominations for its Standing Advisory Group (SAG) for the 2015-2017 three-year term. The deadline for submissions is June 30, 2014. The Board is […]

CohnReznick Is Probably Better at Audits Than You, Per PCAOB Inspection Report

Yesterday, we shared McGladrey's not-all-that-bad inspection report results. Now, it's time to crown a world champion audit firm… CohnReznick! The words every audit firm wants to hear from the PCAOB: The inspection procedures included a review of aspects of the Firm's auditing of financial statements of 11 issuers. This review did not identify any audit […]

McGladrey’s Latest PCAOB Inspection Reveals McGladrey Is Not Grant Thornton

Well, the PCAOB is slowly but surely cranking out more 2012 inspection reports and today, McGladrey gets to celebrate an accomplishment: being better at auditing than Grant Thornton (though I suppose given GT's embarrassing audit failure rate, that isn't saying much). Not only that, they're slightly better than EY and only slightly worse than PwC. […]

Per PCAOB Board Member, Facebook Will Not Sufficiently Prepare You As an Auditor

"For new accountants, the focus on documentation can be a difficult transition — the world of texting, Facebook postings, and tweeting may not fully prepare you. And, of course, communication skills are important even beyond the accountant's documentation of audit procedures. Being able to express yourself effectively is key to your relationships with your co-workers […]

If China Won’t Play, the PCAOB Will Find Someone Else to Play With

Keep holding out, China, the PCAOB don't need to check your stinkin' work anyway: Washington, DC, March 31, 2014 — The Public Company Accounting Oversight Board today announced that it has entered into a cooperative agreement with the Supervisory Board of Public Accountants (RN) of Sweden relating to the oversight of audit firms subject to […]

Save the Date: PCAOB April Public Meeting on the Auditor’s Reporting Model Proposal

The PCAOB is preparing for its April 2-3 public meeting this week, and while I really wanted an excuse to spend two days in Washington trolling the PCAOB IRL, I decided catching the webcast from the comfort of my Lovesac in my pajamas was a much better decision. The panelists aren't much to write home […]

One Guy at the PCAOB Thinks the PCAOB Should Consider Its Language

Aha! Pointy-headed professors aren't the only ones who think the PCAOB's use of the term "audit failure" is totally dramatic and possibly unnecessary. From the JofA: The PCAOB’s use of the term “audit failure” in its inspection reports of audit firms appears to have caused confusion and misunderstanding about the severity of inspection findings among […]

Per the PCAOB, Being Registered with the PCAOB Isn’t the Same as Being Scrutinized by the PCAOB

For some of you, being subject to PCAOB inspection is easily the worst part of your miserable life. For others, simply registering with the PCAOB can lend the kind of automatic credibility shitty restaurants get by slapping a "People Love Us on Yelp" sticker in the window. Imagine boasting you are "PCAOB-registered" without never having […]

Is the PCAOB’s “Audit Failure” Rate Really a Little Dramatic?

Here's the deal. Last week, Mark Peecher and Ira Solomon published an opinion piece on CFO.com titled PCAOB’s ‘Audit Failure’ Rate Is Highly Suspect. Just so we know these guys might have some idea what they are talking about, Mark teaches accounting at the University of Illinois Urbana-Champaign and Ira is dean of the A. […]

The PCAOB’s Valentine’s Day Gift to Us is More Time to Comment on Partner Naming

Compliance Week has our friendly reminder that if you have something to say about audit partner naming, you better speak now or forever hold your peace: As preparers wrap up their year-end financial reports, they'll have a few extra weeks to make their views known on a proposal to begin naming engagement partners in the […]

Forget Auditor Rotation, the PCAOB Has Bigger Fish to Fry in China

As you know, I sat through the SEC Open Meeting webcast yesterday just to catch the copious number of thank yous, Doty giving the prepared remarks I already had, and the conclusion we all knew the SEC would come to, which was approving the 2014 PCAOB budget. BOR-ING. Well out of that meeting, everyone seemed […]

After an Afternoon of Thank Yous, the SEC Has Approved the PCAOB’s 2014 Budget

In case you missed the thank fest that was today's SEC Open Meeting, the PCAOB showed up to get its 2014 budget of $258.4 million approved by the Commission after everyone went around the room and thanked one another for their hard work for capital markets. Repeatedly. Chairman Jim Doty validated the $12.8 million increase […]

Duh of the Day: One in Three Audits Fail, Per the PCAOB

Lodi dodi, we likes to party, we don't cause trouble, we don't bother nobody. This comes from Emily Chasan via CFO Journal: More than one in three audits inspected by the U.S. government’s audit watchdog were so deficient the auditors shouldn’t have signed off, an official said this week. Why do I feel like we […]

Let’s Give Up on the PCAOB But Not on Regulating Auditors

Ed. note: Paul Gillis Ph.D, CPA is a Professor of Accounting at the Guanghua School of Management, Peking University in Beijing, China and co-director of its IMBA program. He is a former member of the PCAOB Standing Advisory Group, he also writes the China Accounting Blog and you can follow him on Twitter. He's not pointy-headed, […]

The PCAOB is a (Necessary) Pain in the Ass(ets)

Ed. note: this is unconventional even for us as we usually don't hand over the soapbox to trolls but in this case, it seemed fitting as Big4Veteran has been waiting YEARS for us to publish the last thing he submitted to us while graciously throwing down his "wisdom" in the comment section just as long. […]

The PCAOB Is Grateful To The PCAOB For the PCAOB’s Work

Jim Peterson has subjected himself to not one but two viewings of the PCAOB's December 4 meeting, so that alone makes him a hero because ain't nobody got time for that. But on his second viewing, the delirium kicked in and he started counting how many times the PCAOB thanked the PCAOB for the PCAOB's […]

Per Jim Doty, The Firms Think PCAOB Inspections Improve Audit Quality

Let's discuss. This just came out of his mouth not 5 minutes ago. Doty: "the firms tell us that they believe PCAOB inspection has improved audit quality." #aicpaSEC — Adrienne Gonzalez (@adrigonzo) December 9, 2013

The PCAOB Is Trying to Give Itself a Small Raise

And by "small" I mean $12.8 million. The Public Company Accounting Oversight Board today approved its 2014 fiscal-year budget of approximately $258.4 million and its 2013-2017 strategic plan. The budget is $12.8 million, or 5 percent, above the Board's 2013 budget of $245.6 million. The Board also approved its strategic plan for 2013-2017 to serve […]

If You’re Not Doing Anything Next Monday, Hang With the PCAOB As They Hammer Out Their Budget

I was totally going to go but, um, I have to wash my cat's hair that day: PCAOB to Consider 2014 Budget and Strategic Plan Washington, DC, Nov. 19, 2013 The Public Company Accounting Oversight Board has scheduled an Open Meeting for Monday, Nov. 25, at 3 p.m., to consider adoption of the PCAOB budget […]

If the PCAOB Thinks Firms are So Deficient, Can We Rely on Audits or Not?

A nearly 40% "deficiency" rate for the big firms according to the PCAOB is news to no one (at least no one around here) but let's look at this post by Emily Chasan in CFO Journal for WSJ anyway: The Big Number: 37.5% That’s the proportion of audits by large accounting firms found to have […]

More PCAOB Comment Letters Need to Complain About the Issuer-pay Model

If you're like us, you've been anxiously awaiting comment letters on the PCAOB's auditor reporting model proposal. There's nothing better than self-righteous firms penning letters filled with thinly-veiled condescension. Plus, the U.S. Chamber owes us all an honest effort after phoning in their initial response.    So far none of the major accounting firms, the AICPA, CAQ, […]

Here’s What You Need to Know About the PCAOB’s Proposed Makeover to the Auditor’s Report

This morning the PCAOB held their open meeting to discuss "Proposed Auditing Standards Regarding the Auditor’s Report and the Auditor’s Responsibilities Regarding Other Information." PCAOB Chairman James Doty called it a "watershed moment for the auditing in the United States." And yeah, I suppose it is. I mean, the auditor's opinion hasn't changed in 70 […]

The Auditors’ Auditors Got a Clean Audit Opinion From Their Auditors

The PCAOB posted their 2012 annual report to its website today and it's filled with all kinds of interesting information. It's the end of a Monday, so we only managed to pull a few examples: There were nine audit firms inspected in 2012 that had more than 100 public company audit clients in 2011. They […]

Deal Between PCAOB, Chinese Is a Lose-Lose Situation

Yes, the PCAOB got a lousy deal by putting Jim Doty's name on the Memo of Understanding with China's Securities Regulatory Commission and Ministry of Finance, but Professor Paul Gillis writes in the Wall Street Journal that the Chinese don't have any room to talk, either: Without inspections, investors can't trust Chinese audits. Investors in Chinese […]

Deloitte Is the Audit Firm That Has Had the Most Trouble in China… By Far

Cruising around el Twittero this morning, we came across something interesting shared by Francine McKenna: Which auditor has most China fraud problems? Deloitte by a landslide. RT @chinajinrong: @retheauditors tradingfloor.com/posts/china-fi… — Francine McKenna (@retheauditors) May 29, 2013 This post by Fredrik Oqvist, founder of China RAI, has a table that shows which audit firms have had […]

Deloitte’s 2012 PCAOB Inspection Report Shows That the Firm Is Less Awful at Auditing Than It Used to Be

The PCAOB news is not letting up. Today, the Board released the 2012 inspection report for Deloitte. Considering the turnaround time in years past, this is pretty fast. The 2011 report was issued last December. If you count yourself as one of those people who enjoy A) reading these reports and B) quality auditing, then you will […]

The PCAOB’s Disappointing Deal with Chinese Regulators

As is its wont, the PCAOB has made a major announcement in very close proximity to a major American holiday. I've been assured in the past that this bad timing is not intentional, but from a PR perspective, it has the tendency to soften the thunder of an important message. But whatever, we'll go with […]

Ernst & Young Latest Big 4 Firm to Have Part II of PCAOB Inspection Report Released

Okay, remind me — there's a saying about "three" and "trend" or "pattern" or something? Forget it, not important. What is important — at least we've made the argument that it is — is that the PCAOB released Part II of Ernst & Young's 2009 inspection report. That makes three out of four Big 4 […]

Guest Post: The PCAOB Is Our Parents Now

Ed. note: The following was written exclusively for Going Concern by a Big 4 auditor who wished to remain anonymous. 

The PCAOB is turning into our parents. Or at least they are using the same tactics in handing out punishment. “We know you were up to no good last night, so if you just tell us what you did we’ll take that into consideration when deciding how long to ground you.”

The PCAOB Is Sorry for the Mess

With PwC CAKEgate in the rearviewmirror, the PCAOB appears to have taken a look around and decided it wants to tidy up a bit by shuffling around its auditing standards. Naturally, Doty & Co. like to run things by everyone first…everyone who has an opinion anyway: The Public Company Accounting Oversight Board has scheduled an […]

Here’s Why Releasing Part II of the PCAOB Inspection Reports Is Important

I know what a lot of you are thinking — "The PCOAB is a bunch of couldn't-hack-it-in-public know-nothings that like nothing more than making hard-working auditors' lives a living hell. And, oh, Part II doesn't mean jack squat." FANTASTIC! Then you won't mind that I'm going to spend the next few hundred words telling you […]

At Least PwC Doesn’t Have to Worry About Improving the Supervision of Its Auditors Anymore

Last week the PCAOB dropped Part II of PwC's 2008 and 2009 inspection reports. This was only the second time a Big 4 firm's Part II had been released since the audit profession was blessed with government regulation. It was like a fire rainbow or an unassisted triple play. Rare! Exciting-ish! We pored over the […]

PwC Loves CAKE and Other Interesting Things from the Expanded PCAOB Inspection Reports

I don't know if anyone else has noticed this, but reading about audit procedures is incredibly dull. It's nearly as dull as actually performing some of these procedures which probably explains why the PCAOB was forced to release Part II for the 2008 and 2009 inspection reports. Luckily, reading about the failure of the most […]

PCAOB Member Jay Hanson Repeats His Belief That Auditor Rotation Is Not Gonna Happen

The Brits can do whatever they want; Mr. Hanson has a story and he's sticking to it:    Having reviewed the comment letters and feedback from the round table panelists and others, it is clear to me that there is little support for mandatory audit firm rotation. As I noted in my statement when we issued the […]

The PCAOB Chairman Is Still Talking About Auditor Rotation

Generally speaking, there are two camps when it comes to the idea of auditor rotation or "term limits" as some like to call it.  There is the camp that sees it as an area worth exploring as part of a larger conversation around auditor independence and objectivity. And then there is the camp that does […]

The PCAOB Is Really, Really Serious About Checking Chinese Auditors’ Work

Oh are we still on this?: The head of the U.S. audit watchdog said on Wednesday his organization may need to resort to enforcement actions against auditors based in China if they fail to hand over documents to U.S. regulators. Jim Doty, head of the Public Company Accounting Oversight Board, told the U.S. Securities and […]

Life After Public Accounting: Harassing Auditors For a Living Isn’t a Bad Gig If You Can Get It

All busy season long, we'll be discussing exit opportunities for those of you feeling like overworked Chinese slave labor counting down the days from your cubes. Remember, there is life after public accounting, even if it doesn't feel like it now. If you've made a break for it and are living the life of your […]

The PCAOB Has Conveniently Released 2011 Inspection Reports For Deloitte, Grant Thornton and Ernst & Young the Friday Before Christmas

Oh I bet you guys think you're slick for this one! Thanks so much for ruining my Doomsday. So here's what we've got. Let's start with Deloitte: The PCAOB identified a few particular deficiencies it didn't like: The inspection team considered certain of the deficiencies that it observed to be audit failures. Specifically, certain of […]

Here’s the New Checklist from the PCAOB

It's been a couple years since the PCAOB issued an auditing standard so I guess they wanted to squeak something in before this Mayan thing took a hold. Shall we cram this in before the fires start? Yes. Let's. Here's a piece of the official screed from the Board: The new standard and related amendments […]

KPMG Chairman: Auditor Rotation Is a ‘Terrible Idea’

It's more or less understood by everyone, with a few exceptions, that pursuing mandatory auditor rotation is a giant waste of time. There has been much discussion of the issue — from the hallowed walls of a PCAOB open meeting to the slums of the Going Concern comment section — and while there has been […]

PCAOB Sick of Audit Firms Playing Dumb with ICFR Standard

The PCAOB is still chugging along spitting out reports about how sucky the firms are at doing audits, this time releasing their observations from the 2010 inspections of domestic annually inspected firms regarding deficiencies in audits of internal control – which, in fewer words, is a dig at how crappily the firms are testing internal […]

PCAOB Member Jay Hanson Can’t Imagine a World with Auditor Rotation

On Monday, PCAOB Chairman James Doty gave a speech where he mentioned, among other things, that "auditor term limits" was something the Board would consider in order to "protect the auditor's independence."  Undoubtedly, this was disheartening news to auditors who count themselves as the Big 4 variety because they've gone on record to voice opposition and […]

Auditors Will Be Happy to Know That Term Limits Are Still on the Table

In a keynote speech at the AICPA's National Conference on SEC and PCAOB developments, Chairman Jim Doty passed on the opportunity to mention extremely recent developments and instead focused on things like the importance of independent auditing to "our economic success" and audit firm culture and the PCAOB's current initiatives. In fact, Mr. Doty doesn't mention […]

Hiring Watch ’13: PCAOB

Yesterday, the PCAOB held an open meeting discussing its plans for being the most dominating force in public accounting regulation over the next few years. Within these plans is a strategory to not just be the type of regulator that points out the things that you royally fucked up, but also to be a resource […]

Report: That Sloppy McGladrey Audit Was Definitely Maybe Probably Unity Bank

HEY, everyone remember that really sloppy audit that 3 (then) McGladrey & Pullen auditors got smacked on the wrist and/or face for when the PCAOB found out they threw in a bunch of necessary documentation after the fact? Jonathan Weil over at Bloomberg seems to have unpuzzled the whole thing and is saying the mystery […]

Three McGladrey Auditors Learn a Tick in Time Saves Nine

Everyone knows if you're going to add evidence after an audit is over, you have to do it before the documentation completion date and you better be sure to document the additional material thoroughly. But for McGladrey (then McGladrey & Pullen) auditors Dale Arnold Hotz, Jyothi Nuthulaganti Manohar and Michael Jared Fadner, an impending PCAOB […]

PwC Wants the PCAOB To Get Better

PwC's November just got more annoying. According to the PCAOB's latest inspection, 41 percent of the 60 PwC audits inspected were not up to snuff, up from 37 percent last year. Issues called out by the PCAOB included failures to identify, or to address appropriately, financial statement misstatements, including failures to comply with disclosure requirements, as […]