The PCAOB inspection status report is unchanged from last month: The PCAOB has released the public portion of the 2016 inspections reports with respect to three of the four largest U.S. accounting firms: Report on 2016 Inspection of Deloitte & Touche LLP, Report on 2016 Inspection of Ernst & Young LLP, and Report on 2016 Inspection of PricewaterhouseCoopers LLP. No 2016 report has yet been issued with respect to KPMG. The results of the 2016 inspections of D&T, PwC, and E&Y are summarized in the table below.
After the PCAOB has made all of the 2016 Big Four firm inspection reports publicly available, the Update will present an overview of the PCAOB’s inspection findings concerning these firms.
The PCAOB has also released its Report on 2016 Inspection of Grant Thornton LLP, another large accounting firm subject to annual PCAOB inspection. In its 2016 inspection of Grant Thornton, the PCAOB reviewed portions of 34 public company audits. The report describes Part I deficiencies in eight (24 percent) of those engagements.
Comment: Audit committees should discuss the results of the firm’s most recent PCAOB inspection with their engagement partner. If the company’s audit is mentioned in either the public or nonpublic portion of the inspection report, the audit committee should understand the reasons for the reference to the audit and how it will affect the engagement in the future. If the company’s audit is not cited in the report, the audit committee should explore with the auditor how deficiencies identified in other audits might have affected the company’s audit and how changes in the firm’s procedures might affect future audits. Audit committees should also have an understanding of how the firm intends to remediate quality control deficiencies described in the nonpublic portion of the report.
Prior editions of the Audit Committee and Auditor Oversight Update are available here.