September 23, 2018

Those Who Know, Know BDO Got Their AS5 Kicked in Latest PCAOB Inspection Report

Another day, another PCAOB report. Today, our lucky victim is BDO USA, LLP.

Of the 23 audits inspected, the PCAOB found deficiencies in 15 of them. For those of you playing along that home, that puts them at a 65% failure rate which means they are in the lead for crappiest audits in America of 2013 inspection reports released so far.

  • Deloitte: 28%
  • McGladrey 31%
  • PwC: 33.3%
  • KPMG 46%
  • EY: 50%
  • BDO: 65%

Nice work, y'all! You're just as bad as Grant Thornton was last year, and that's bad.

Last year, BDO came in at 39%, so either the firm is getting worse at auditing or the PCAOB is getting tougher on audit firms — we'll leave that one to you all to argue amongst yourselves.

As with their Big 4 counterparts, BDO's biggest problem was getting Auditing Standard No. 5 right, racking up 14 dings in that area. In case you weren't paying attention just 30 seconds ago, that means all but one of the audits considered "failures" by the PCAOB were deficient in that area.

Let's talk about that one audit that didn't get dinged in AS5, Issuer F:

The Firm failed to perform sufficient procedures to test revenue from contracts accounted for using the percentage-of-completion method. Specifically, the Firm failed to sufficiently test costs incurred and allocated to individual contracts, as it limited its procedures to testing only one contract that represented less than one percent of total revenue. The Firm also failed to sufficiently test the estimated costs to complete, as the Firm's testing was limited to (1) for all fixed-priced contracts, comparing the estimated costs to complete to the corresponding estimates at prior and subsequent dates and (2) for certain contracts, comparing the estimated costs to those originally budgeted. The Firm's procedures to evaluate significant variations identified in that testing were limited to inquiring of the issuer's finance staff, internal audit personnel, and project managers, without obtaining corroboration of the responses to those inquiries . ( AS No. 13, paragraph s 8 and 13; AU 342, paragraph .11)

Let us all remember what the PCAOB says about audit deficiencies identified in these reports:

Whether or not associated with a disclosed financial reporting misstatement, an auditor's failure to obtain the reasonable assurance that the auditor is required to obtain is a serious matter. It is a failure to accomplish the essential purpose of the audit, and it means that, based on the audit work performed, the audit opinion should not have been issued.

And all the people in the church say "Amen!"

Related articles


Jeremy Newman Just Wants to Be Clear, We are NOT Declaring Victory Over Banco Espirito…YET

BDO_International.pngAfter throwing an all night rager last week when BDO International Global Coordination skated on the $521M verdict, Jeremy Newman, BDO Boss, wants everybody to chill.

Newman said he had always been confident that BDO International’s arms-length approach would be proved but added: ‘There is still the risk of a further appeal, as well as the appeal by the US firm.’

See? Staying cool. Not out of the woods yet. But when we beat those bastards on appeal, then we are getting down.

Newman stays cool after BDO victory
[Accountancy Age]

Funny homeless guy sign

You Know That Guy Who Panhandles on Your Block? He May Be a CPA.

Anybody out there looking to help their fellow CPA, who’s down on his luck?
The Wall St. Journal is reporting that the former BDO Seidman LLP CEO, Denis Field may have to pay back a portion of $180 million that is being sought by prosecutors in the tax shelter case that involves Field and six others.
Natch, everybody has denied wrongdoing. The charges include conspiracy and tax evasion. Good luck with that.

Prosecutors Seek Ex-BDO Seidman CEO, 6 Others To Forfeit $180M