How much worse? As we noted yesterday, EY's failure rate was 35.7%. In 2012, of the 52 audit engagements included in the report, there were 25 engagements that had deficiencies that were of such a degree that the inspection team(s) considered them to be audit failure. That's an audit failure rate of 48%. This is worse than when Deloitte was at the bottom.
Jesus, that's bad.
You can read each of the deficiencies in full detail on the next page but this table that is on page 23 of the report summarizes the auditing standards that "are primarily implicated" by the deficiencies listed:
Looking at this table and seeing the number of deficiencies related to AS No. 5, you can't help but wonder if either 1) EY is completely missing something or 2) the firm's interpretation of the standard is fundamentally different from that of the Board's inspectors.
Unless I'm wildly misinformed about the intellectual prowess of EY audit wonks, I'm inclined to think it's scenario 2. If so, this brings up a completely different question — who's being bull-headed here, EY or the Board?
If you're EY, there's really no reason to get anxious about the results since you've already had Part II of a past inspection report released with really no repercussions. The firm can stand its ground knowing full well that the worst has already happened and with a tweak here and there, things can get a little better. I mean, if Deloitte can do it, why can't EY?
PCAOB fined Whitley Penn $200,000, three CPAs for really crappy auditing Back in March, the PCAOB disciplined top 45 firm Whitley Penn and three of its partners for ignoring the fact that there are PCAOB rules in place for public issuer audits. With all the coronavirus hysteria that has been going on, we failed to […]
EY Netherlands partners are answering the call to help pad the Dutch firm’s coffers because business kinda sucks right now due to the Rona pandemic. Bloomberg reported earlier this week: EY’s Dutch unit is asking its partners in the Netherlands to stump up funding to help it confront the blow to its business from Covid-19 […]
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