PCAOB issues inspection observations of auditing during economic crisis
The Public Company Accounting Oversight Board (PCAOB) recently released a report summarizing inspection observations of audits of financial institutions and other companies during the economic crisis.
- PCAOB inspectors identified instances where auditors appeared not to have complied with PCAOB auditing standards in connection with audit areas that were significantly affected by the economic crisis, such as fair value measurements, impairment of goodwill, indefinite-lived intangible assets, and other long-lived assets, allowance for loan losses, off-balance-sheet structures, revenue recognition, inventory, and income taxes.
- Firms have made efforts to respond to the increased risks stemming from the economic crisis. The deficiencies identified by inspectors in their reviews of issuer audits suggest that firms should continue to focus on making improvements to their quality control systems.
- The PCAOB will focus on whether firms’ actions to address quality control deficiencies described in board inspection reports have, in fact, reduced or eliminated subsequent occurrences of the kinds of deficiencies described in this report.
- The observations described in this report will serve to inform future PCAOB actions in connection with certain inspection, enforcement, and standard-setting activities. The PCAOB will consider whether additional guidance is needed related to existing standards.
- PCAOB inspectors will continue to focus on firms' audits and quality control systems, particularly as they relate to audit risks posed by the ongoing effects of the economic crisis and any future similar events.