PCAOB inspections show some improvement in 2020


PCAOB inspections showed some improvement in firm audit performance in 2020 compared to the previous year, although a board staff report released Monday said inspectors continue to identify shortcomings that recur from year to year.

In 2020, the PCAOB inspected 510 audits from a total of 114 US audit firms, plus 107 audits from 39 non-US audit firms. For the majority of audit firms inspected annually, PCAOB inspectors identified fewer findings in 2020 compared to 2019.

In the audit firms inspected every three years by the board, some improvements were noted, but PCAOB staff said the gaps remain high.

The most common areas of audit deficiencies remained mostly consistent with previous years, including:

  • Internal control of financial information (ICFR).
  • Receipts and associated accounts.

The inspectors also noted concerns about the companies’ quality control systems. These included issues related to independence, engagement quality reviews and internal oversight.

Board inspectors also found that in some audits, auditors assessed the severity and impact of a cybersecurity incident but did not consider whether the incident affected their identification or risk assessment of material misstatement; whether changes in the nature, timing or extent of audit procedures were required; and whether the incident could indicate one or more deficiencies in the ICFR.

In an emerging area, some auditors have not performed procedures to assess the sufficiency and relevance of the existence and valuation of registered crypto-assets at year-end.

PCAOB inspectors also noted the good practices observed by inspectors in audit firms in 2020:

  • Progressive steps in response to the COVID-19 pandemic, including increased training and support, a focus on consultations, and modified customer acceptance and retention procedures.
  • Real-time monitoring of ongoing audit missions.
  • Increased supervision of work performed by specialists.
  • Use of practical aids to help engagement teams identify risks for each factor relevant to the management estimation process.
  • Monitor the workload and expertise of engagement quality reviewers and hire qualified and experienced third-party engagement quality reviewers as required.
  • Provide industry focused training and tailor work programs to address industry specific risks and issues.

Ken tysiac ([email protected]) is the JofAeditorial director of.

Source link

Leave A Reply

Your email address will not be published.