In its 2023 audit inspections, the US Public Company Accounting Oversight Board (PCAOB) found that 46% of audits failed to provide enough evidence to support the final audit opinion, as reported by CFO Dive.
Overall, the percentage of audits deemed to be flawed increased compared to 2022, continuing a negative trend that has appeared in recent years. However, some particularly error-prone firms “are strongly influencing the aggregate deficiency rate,” the PCAOB warned. Among the Big Four, the rate of deficiencies in audits remained at 26%.
Notably, the flaws among the Big Four seem to be largely isolated incidents. By contrast, many past inspections featured a large number of common deficiencies across multiple audits. This suggests that firms have seen some success in improving their quality control systems, according to the PCAOB.
“These inspection results point to some small signs of movement in the right direction,” said PCAOB Chair Erica Y. Williams. “Still, overall deficiency rates are unacceptable, and firms must do better. Now is the time to double down on efforts to improve and deliver the audit quality investors deserve.”
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