November 13, 2018

PCAOB Inspection Reports Are Practically Beach Reads Now

pcaob inspection report pwc ey 2016

Over the years, people have complained — myself included — that PCAOB inspection reports were not exactly useful documents. Sixty-odd pages of audit and legalese don’t exactly make for riveting content.

However! In the new EY and PwC inspection reports that were released today, you’ll note executive summaries that list tables for the “Effects of Audit Deficiencies on Audit Opinions,” “Most Frequently Identified Audit Deficiencies” and “Areas in which Audit Deficiencies Were Most Frequently Identified.” It’s a decent snapshot of the firm’s performance of these audits, what kind of audit problems occurred and where they occurred within the financial statements.

This is particularly exciting because I mentioned the lack of executive summaries not that long ago. I’m not saying you have me to thank, but I’ve heard that my writings do get passed around PCAOB HQ (if only after being scrubbed for colorful language).

Now all we need are for the users to be identified, letter grades for audit quality, a tl;dr section, and you’ll see these inspection reports in every Hudson News.

[EY, PwC]

 

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PCAOB: The Rodney Dangerfield of Bureaucracies

pcaob.gif It’s tough being part of a bureaucracy, especially if you’re doing something as glamarous as babysitting auditors. The CIA, FBI, NSA have got it easy. You get to catch bad guys, use guns, and Hollywood makes movies about you. Aside from the warrantless wiretaps and otherwise general big brotherishness, it’s cool.
The PCAOB doesn’t get that luxury. They get to poke around auditors’ work and then tell them how much they suck at it. Not so fun for anybody. They also get to write auditing standards. Take the watchdog aspect, multiply it times infinity, and that’s about the amount fun we’re talking about for writing rules on auditing.
But now people are saying they’re too slow in writing these I-already-want-to-kill-myself boring rules? Yep:

“Given how little they’ve accomplished in the standards-setting area, they don’t get a passing grade,” says Lynn Turner, a former chief accountant for the SEC.
Turner says he and a group of investor advocates wrote to the PCAOB in 2004, asking it to improve fraud standards. But the work remains undone, he says.
Bill Gradison, the board member whose term expires in October, calls the criticism fair. “We’ve been much slower than other standards writers,” he says.
By comparison, the International Auditing and Assurance Standards Board, which sets international auditing standards, among other duties, finished revising its own standards in March. The process, which included 37 standards, took about five years

Man, now comparisons to the Europeans. They’re looking for some new blood at the PCAOB though, since Mark Olson is retiring as Chairman and another board member’s term is expiring.
But don’t you go calling them lazy! “the PCAOB is taken seriously by the auditing community and deserves credit for trying. ‘Anyone who says it isn’t is off the wall,'”
What a ringing endorsement.

COMPLIANCE WATCH: Oversight Board Sets Sluggish Pace
[WSJ]

PCAOB, We Need to Have a Talk

pcaob.gifPCAOB, we here at Going Concern want to help you get some respect. We really do.
We don’t think it’s fair that people think you’re slow at writing rules for auditors. Okay, maybe you could pick up the pace a little bit but we know that it takes a lot of work and patience to write those rules. But then we heard about this and we want to let you know that we aren’t angry, you’re just letting us down.
Reuters:

The U.S. audit watchdog voted on Thursday to defer its first inspection on 49 foreign auditors in areas such as the European Union, China and Switzerland for up to three years.

Like we said, we’re not mad. We’re disappointed.

US PCAOB delays 1st review of 49 foreign auditors
[Reuters]